IFT - Infratil

[CJ]

No shareprice reaction and only a small reduction in the warrents.

Are people uncertain or thyey just dont care??

[Halebop]

A reasonably stable cashflow, little competition, cashflows underwritten by public funds. The acquisition has the hallmarks of many standard infrastructure investments. I think it's pretty much business as usual.

I suspect public transport is also a modest demographic play: The aging population in the longer term assisting Stagecoach's least profitable routes during the day. While the major cities will most likely continue to promote and support public transport in the face of higher than norm population growth and the congestion / distribution / infrastructure challenges this creates.

[Snow Leopard]

Infratil's Stagecoach acquisition presentation is available on their announcements page and I must say it does not actually strike me as a great deal for Infratil (and thus me).

[Snow Leopard]

a cue for all you Monty Python fan's out there:

I didn't expect the Stagecoach Acquisition...

[kittydashwood]

forget the buses for a moment.
Surely it's abrilliant plan to expand the ferry services in all directions Riverhead, Albany, PtChev, Upper Harbour, warkworth, Walkworth. Good for traffic congestion, good for tourism, good for IFT holders.
Sea unites and land divides in Asia and the Pacific, Eurocentric infrastructure assumptions are fine in the Northern Hemisphere!
Wake up and smell the sea breeze because hopefully all those smelly buses will run on chip fat from ferry patrons.

[8]

[Sideshow Bob]

Shareholder discount???

[rmbbrave]

Infratil plans quick Stagecoach payoff
23 November 2005
By MARTA STEEMAN

Infratil has forecast positive earnings from Stagecoach's bus and ferry business in the year to March 2007.


The infrastructure investor earlier said it had finalised a deal to buy the business for $250.5 million.

Yesterday it said growth would come from a likely doubling of funding for public transport in the next 10 years.

The Auckland Regional Transport Authority was looking at a 10-year plan for public transport funding of bus, ferry and rail services and Stagecoach was represented on the working groups.

Stagecoach executive chairman Ross Martin said the authority wanted to boost bus trips from about 45 million a year in Auckland to 90 million in the next 10 years.

In the future, public transport funding would not be about lowest price tenders but value for money. The existing tenders would remain in place till a new structure for funding public transport was resolved.

Longer-term and larger contracts were a likely outcome from the review of funding public transport services.

Infratil executive chairman Lloyd Morrison said Morrison and Co, which manages Infratil's investments, had become a 41 per cent shareholder in Waikato bus company Go Buses. The experience led it to develop an interest in Stagecoach a couple of years ago.

Infratil said the purchase would be funded from existing facilities. After the acquisition, total debt would rise to about $590 million. Gearing would be a comfortable 41 per cent.

The Stagecoach deal was expected to be earnings per share positive (pre amortisation of goodwill) in its first full year, the year to March 2007.

Stagecoach's revenue for the year to April 30, 2005, was $165 million. Earnings before interest, tax, depreciation and amortisation were $35 million.

Infratil forecast Stagecoach's ebitda to rise 11.5 per cent to $39 million in the year to April 2006, partly as a result of fare increases.

Of the $165 million in revenue from the bus services in Wellington and Auckland and the ferry services in Auckland, $115 million was fare revenue.

Two-thirds of the business is in Auckland and a third in Wellington. The average age of the fleet is eight years. New buses have cost $70 million in the past three years.

[Toddy]

A nice little article on Bloomberg.

Infratil Bus Purchase May Get Auckland Motorists Out of a Jam
Nov. 28 (Bloomberg) -- Gilbert Ullrich has opened more branches of his aluminum products business in Auckland to cut time lost by delivery trucks stuck in traffic jams in New Zealand's biggest city.

Auckland ``is being suffocated by the traffic,'' said the owner of Ullrich Aluminium Co., New Zealand's largest maker of aluminum ladders, joinery and boat fittings. ``We need decent public transport.''

As of this month, expansion of bus services will be the job of Infratil Ltd., a Wellington-based utilities investor, which agreed to buy bus companies in Auckland and Wellington from Perth, Scotland-based Stagecoach Group Plc for NZ$251 million ($173 million). The buses are subsidized by local governments that vowed to woo more commuters out of their cars and on to buses.

Fourteen years of economic growth has filled Auckland's streets with new cars, slowing morning rush hour traffic to an average 35 kilometers an hour (22 mph) according to the Regional Transport Authority. In the next 11 years the city's population is forecast to grow 25 percent to 1.6 million people, putting another 100,000 vehicles on the road.

Two-thirds of Stagecoach's bus fleet is in Auckland, where the Authority plans to spend NZ$6.8 billion on roads in the next 10 years to ease congestion. Another NZ$3.8 billion will go on improving public transport in an effort to double the number of bus trips to 90 million a year.

`National Focus'

``For environmental reasons, for congestion reasons, there's very much a national focus on improving public transport,'' said Lloyd Morrison, whose investment bank manages Infratil. ``The outlook for the sector is good and we expect a considerable increase in patronage over the next 10 years.''

The acquisition adds 1,023 buses, 10 depots and nine commuter ferries to Infratil's investments, which include a controlling stake in the airport company in the capital city of Wellington, and three other international airports. The company also owns electricity utilities.

Infratil's purchase comes six months after a strike by drivers put Stagecoach buses off Auckland's roads for seven days. Patronage has also fallen since 2003, following competition by new rail services and a decline in the number of Asian students studying in the city.

``To run buses you have to do lots of little things well all the time,'' said John Norling, who helps manage the equivalent of $590 million at Alliance Capital Management in Wellington. Infratil is a good manager which will get its share of new business in Auckland. Whether it can translate that into better- than-average returns is yet to be seen, he said.

Local Ownership

Building solid businesses in a strong national economy is a key theme for Morrison, 48, who was deputy chairman of the country's stock exchange until he resigned in September because of other commitments.

In the past year, he campaigned against an alliance proposed between Qantas Airways Ltd. and Air New Zealand Ltd., the biggest airlines serving the country, and a bid by Australia to take over regulation of New Zealand's banks.

Infratil is also leading a so-far unsuccessful bid for government approval to convert a military airbase into a second airport to serve Auckland, the nation's most-populous city.

``We're not doing it because we're a charity,'' Morrison told the New Zealand Herald in August. ``We're doing it because we're a New Zealand company and it's in our interests that New Zealand is better off and more competitive as a nation.''

Stagecoach

Stagecoach, the U.K.'s third-largest bus operator, bought its first New Zealand buses in 1992 from Wellington City Council after a law change designed to increase competition in public transport and encourage councils to sell their stakes in bus companies, ports, and power companies to pay for roading, water and sewerage.

The spate of asset sales that followed resulted in Canada's Transalta Corp. becoming one of the

[rmbbrave]

Right place, right time is at core of Infratil strategy

03.12.05
By Chris Daniels


On the face of it, last month's $250 million purchase of the bus and ferry company Stagecoach NZ is a departure from Lloyd Morrison's usual practice of buying into "pure infrastructure": utilities, ports and airports.

But Morrison's success at Infratil, which he founded in 1994, stems from a knack for accurately spotting changes in society or the economy and then picking a way of making money out of it. He is hoping Infratil's purchase of Stagecoach will be no different.

Morrison now finds himself coming to the attention of a wider constituency, this time one made up of taxpayers, ratepayers and public officials - all of whom want to know exactly where this "big picture vision" may be going.

Spend a few minutes listening to Waitakere Mayor Bob Harvey and you may be convinced we should all be hitching our wagons to the Morrison-Infratil star.

"This guy is a remarkable entrepreneur," says Harvey. "He's got a social conscience. He is highly regarded in the business world. He's a renaissance man. He likes music. He likes literature."

Harvey came to have close dealings with Morrison and Infratil during an unsuccessful collaboration to turn Whenuapai airfield into a commercial airport.

"He's aware. He is in tune and he understands that everything is connected - the transportation, air travel. He understands the minutiae of business, small and big," says Harvey. "I think he's probably one of the most impressive business people of recent times. I think there's a big picture in his mind."

Local councils, ratepayers, commuters and shareholders all have a greater stake now in how this "big vision" actually works in practice.

Through Stagecoach's bus and ferry operations, Infratil will be receiving many millions of dollars in public transport contracts.

Stagecoach is expected to get $48 million in public subsidies for Auckland buses alone this year, a combination of Land Transport New Zealand and Auckland Regional Council money channelled through Arta, which contracts public transport services.

Morrison points out that on top of all considerations at Infratil is creating value for its shareholders.

"That means performing on a longer-term basis. That's something that's not easy to do. We think that we're okay at our jobs, but we don't think we're any better than anybody else."

As close as we get to an over-arching vision or big picture from Morrison is an idea that no matter how clever you might be, you have to be in the right place.

"We've recognised that the most important thing for creating value is being in the right place. So we spend a lot of time trying to be in the right place."

Morrison has said it did not matter how good a manager was, if he or she was in a declining industry, there was little chance of success.

"Most people, whether they are a dairy owner, corporate magnate or even an artist in Switzerland, are better off than the best in Zimbabwe."

Infrastructure is undergoing significant change, not just in New Zealand, but everywhere.

"So we position ourselves for that and, within infrastructure, we've looked for sectors that have major change taking place over a period of time, plus good growth prospects.

"The reason we've done well over the past 12 years is because utilities as a whole have done well. The reason we've done well in TrustPower is because renewables have done well. The reason we've done well in airports is because most airports which have exposure to low-cost airlines have done well.

"So we don't attribute our performance to our own ability. We attribute our performance to being in the right place and, I believe, that's something you can't ignore."

The trick is in knowing exactly which part of the sector to put your money into. Accurately predicting the surge in European low-cost airlines is one thing, but knowing to invest in airports, not the airlines themselves, is where the skill of Morrison and his team can be seen.

From a h

[CJ]

quote:Originally posted by rmbbrave All of these investment add up to $1.47 billion but IFT's market cap is $822 million.

Is it fair to say IFT's SP is about half what it should be?

They hold a bit of debt remember. Not sure how much but a look at the last statutory aco****s should tell you. There new investments have also been debt funded so what ever debt taht had at the last stats has now increased.

Interesting this as IFT is essentually double levered. Take TPW, one of its main investments. It has say 50% equity, 50% debt. IFT then buys that for 50:50 equity debt. That means there investment in the assets of TPW have 25% equity, 75% debt. So as long as it keeps picking winners, this explains why it has had a good return. Just like increasing your leverage in your house in a rising market.