Infratil says no decision on asset sales such as Z Energy, NZ Bus

Infratil and its manager Morrison & Co say no decision has been made to sell specific assets such as Z Energy of its NZ Bus unit.

The NZ Herald reported today that Infratil has been reviewing its capital structure and both Z Energy and NZ Bus could be sold to free up capital for it to make other investments.

Infratil and co-investor the New Zealand Superannuation Fund would keep about 50 percent of each business, the report said.

Infratil issued a statement in response, saying it reviews its portfolio on an ongoing basis though has "not identified any particular investments for sale at this time".

"We've not decided to sell anything," says Jason Boyes, head of legal at Morrison & Co. "We were worried retail investors might think we've progressed down a path with particular assets" after reading the report.

Analysts have been speculating on which assets could be sold, he says.

Z Energy could potentially be valued at up to $1.2 billion, putting it among the 20 largest companies on the NZX, the Herald reported, citing analysts.

"It does make sense. Doing it now would take advantage of the favourable market conditions," Grant Swanepoel, an analyst at Craigs Investment Partners, told the paper. Infratil needed to consider unlocking the value from some of its investments.

Infratil shares fell 0.4 percent to $2.42 and have gained 7.5 percent this year.


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Reading between the lines, Infratil are positioning themselves for a stake of Mighty River Power.

Infrastructure assets have virtually no risk, and for the most part price setters rather than takers.

Accordingly, the offer/float price should reflect this. Determining price will be left to the vested interests of overseas affiliated merchant banks/stock brokers.

Replacement cost less depreciation, plus the cost of resource consents should be the value. Its float value will be determined based on a return on earnings. What should be sold on a 4% return, which based on $300 million profit represents $7.5 billion value, will be priced at 5% which represents $6.0 billion value.

If overseas interests get 15% of the company, this would represent a nice little gift of $225 million, not to mention a percentage of the float costs to the overseas parent brokers.

Hopefully the Supreme Court puts a stop to this rort by overseas interest, which clearly dictating the running of this country under the present administration.

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