It seems unlikely that Infratil would want to acquire the 25% of CDC on offer. Firstly, it goes against their usual strategy of getting into a futuristic investment early (and cheap) and adding value, then watch iit inflate as others catch on to the new trend. Secondly there is a large ongoing demand in the current businesses for constant investment funds that is likely to stretch their balance sheet for many years. CDC itself just with their present stake will need funding for expansion from its current circa 500-700 MW to above 2 GW before 2030. Then there is funding need for data centres in the UK and renewables in the US, Singapore, Phillipines and Japan. Not to mention any growth funding for their age care, radiology and Airport businesses.
The OneNz business is mature and is unlikely to generate more than the current annual $600m or so in EBITDA but the contribution from CDC will rise from $300m now. These two together account for around 90% of their profits. Longroad energy should generate good returns in about 3 yrs when they have completed the target 7 GW or so planned but Infratil only owns 37% of that.
Bottomline - funding will be stretched. Still, one never knows, these guys do come up with surprises time to time.
IFT Price at posting:
$9.85 Sentiment: None Disclosure: Held
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