Infratil has been a long-term holding in our New Zealand share portfolios since 2002 and in May we also added it to our Property & Infrastructure portfolios.
Infratil is an investment company that owns energy, transport, data and social infrastructure businesses positioned to benefit from mega growth trends. The sorts of mega trends that Infratil focus on include decarbonisation of the economy, data proliferation, aging demographics and growth in air travel. We are strongly of the view that Infratil’s focus on these long term drivers of growth is a smart strategy that will reap future rewards.
It has worked in the past. By backing these mega trends and through astute management Infratil has delivered an impressive 16.0% p.a. total shareholder return since it listed back in 1994.
During the month Infratil announced the acquisition of Vodafone NZ partnering Brookfield Infrastructure Partners for NZ$3.4b in the deal. To help fund the acquisition Infratil raised $400m of new equity from shareholders.
While Infratil sees this as an investment with solid mid-teen equity returns, we believe there is potential to materially exceed this.
To us the deal looks similar to Infratil’s extremely successful transformation of Shell’s NZ assets into today’s Z Energy. Infratil earned 4 times its initial investment in this transaction over just 5 years!
The Vodafone NZ acquisition further increases Infratil’s weighting to the theme of connectivity and long-term data growth, while also strengthening the cash generative core of the portfolio.