Infratil is planning to take full control of telco One New Zealand and is raising $850 million to fund the deal and other growth opportunities.
NZX-listed Infratil told investors this morning it had reached an agreement with Canada-based giant Brookfield Asset Management to acquire its 49.95 per cent stake in One New Zealand for $1.8 billion.
Such a deal would increase Infratil’s ownership from 49.95 per cent to 99.9 per cent. (Update: the deal was completed as planned on 15 June.)
Infratil will fund the acquisition through a planned $850 million equity raising along with cash reserves and debt.
Infratil CEO Jason Boyes said further investment in One NZ was strategically and financially compelling for Infratil and its shareholders.
"One NZ has had strong momentum following the recent rebrand and other business transformation initiatives that are ongoing, with further upside to be realised," he said.
Full control of One NZ provided business plan and capital allocation flexibility and a renewed focus on long term value creation, Boyes said.
“Beyond One NZ, we continue to see exciting near-term opportunities for investment across our portfolio, in particular across our digital and renewables platforms," he said.
"Since our full year results announcement on 22 May, CDC Data Centres continues to see strong demand signals for capacity.
"We will maintain balance sheet capacity and flexibility following the transaction to support our investments in assets such as CDC and Longroad, with a focus on long term growth and value for shareholders.”
The acquisition valued One NZ at an enterprise value of $5.9 billion with an implied EV/EBITDA multiple of 9.8 times. That enterprise value assumed net debt of $2.3 billion, including $918 million of lease liabilities.
William Smales, partner and chief investment officer at Infratil's infrastructure investment manager, Morrison & Co, said as consumer demand for connectivity solutions rose exponentially, digital infrastructure had to continue to deliver increasingly reliable, high-capacity connectivity.
"Since acquiring One New Zealand with Brookfield in 2019, we have invested meaningful capital to support network expansion, including the roll-out of 5G, and are pleased to now assume full ownership of the business," Smales said.
"We look forward to leveraging our capital and depth of expertise in digital infrastructure to continue to provide New Zealand with world-leading connectivity.”
Last month, One NZ and CDC Data Centres, along with Longroad Energy, delivered the highlights of Infratil's 2023 financial year.
Infratil recorded a net parent surplus from continuing operations of $643.1 million for the year ended 31 March, driven by significant growth in earnings from its associates and the gains recognised on the sale of the Trustpower retail business and the sale of One New Zealand’s passive tower assets.
Of the remaining small shareholdings in One NZ, CEO Jason Paris holds 0.03 per cent and chief enterprise director Lindsay Zwart holds 0.02 per cent.
Infratil is now in a trading halt as it undertakes the share placement component of its capital raise. This will remain in place until an announcement on the outcome of the placement or the market opening on Friday, 9 June.