Morningstar | Infratil Sells Student Accommodation; No Change to FVE
Narrow-moat-rated Infratil has conditionally agreed to sell its 50% stake in the Australian National University student accommodation concession to AMP Capital. The transaction is expected to complete April 2019 and the firm will receive cash proceeds of AUD 162 million. We adjust our forecasts for the sale and maintain our NZD 3.10 per share fair value estimate. At current prices, the stock is overvalued. As a reminder, we intend to cease coverage of Infratil in May 2019.Management flagged the potential sale of this business previously, so the announcement comes as no surprise. We think it makes sense to sell relatively passive income investments, which are in strong demand and garnering good prices. Infratil bought the stake in August 2016 and carried it at a value of NZD 107 million on its books. The sale price represents a good return. Other benefits include a simplified portfolio and a return of capital to reinvest in management’s preferred themes of renewable energy, retirement services and data centres.
Infratil and its subsidiaries own and operate infrastructure and utility businesses and investments in New Zealand and Australia. Co. and its subsidiaries operate in six business segments: TrustPower, Wellington Airport, NZ Bus, Infratil Energy Australia, Infratil Airports Europe and Other. Trust Power is Co.'s renewable generation investment; Wellington International Airport is Co.'s Wellington Airport Investment; NZ Bus is Co.'s transportation investment; and Infratil Energy Australia (including Perth Energy) is Co.'s non renewable generation investment. The principal investments in the Other segment are Co.'s interests in Z Energy, Metlifecare, RetireAustralia and ASIP.
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