Infratil/Super Fund finalise Shell asset sale

UPDATED: Infratil and the New Zealand Superannuation Fund have picked up Shell’s local assets for less than $700 million and are expecting the business to respond well to local ownership.

The deal – which has been in the works for a year and should be completed on Thursday – has seen the base purchase price of the assets set at $696.5 million, with an adjustment of more than $208 million for actual net working capital.

The final price is lower than the $700-$1 billion the consortium was widely expected to pay for the assets.

Between them, the super fund and the infrastructure company will contribute $420 million in total equity, with the banks providing the remainder of the funding.

Describing the deal as a “once in a generation” opportunity, Infratil managing director Marko Bogoievski said the assets will form a core part of Infratil’s portfolio for some time.

Under its new arrangement, the Shell assets will form 10% of Infratil‘s asset mix, making it the fourth biggest part of its business, with Trustpower still its biggest investment.

Mr Bogoievski said the mix of assets, which run from pipelines to retail stores, made it an integrated business which had already been established as the most cost effective way of getting oil products to the customer.

He said Infratil was confident the business would respond well to having a local owner like Infratil.

He said there was growing evidence of the benefits of a local focus, especially when the New Zealand assets formed a relatively small part of Shell’s global business while it was major focus for Infratil.

Shell first put the assets – which include 17.1% of listed company NZ Refining and more than 200 retail outlets – on the market in May last year and bought in 50/50 venture between Infratil and NZ Super.

As well as the stake in NZ Refining, the assets include access to refinery and pipeline capacity, ownership in a joint national distribution network, 25% ownership of the Fly Bys programme and facilities at Auckland and Christchurch airports.

The new owners of the assets have also paid $13.5 million as an advance license royalty payment for the Shell brand.

Shares in Infratil (NZX:IFT) have risen 1.82% to $1.68 in response to today’s announcement.