SYDNEY — Transport and energy infrastructure fund Prime Infrastructure Group fell 18% when it recommenced trading Tuesday following a 1.80 billion Australian dollar (US$1.67 billion) capital injection and restructure, in a sign that investors remain choosy about investing in infrastructure funds.
Analysts said uncertainty over the value of the group's assets, a lack of interest from large investment funds wary after the group's near collapse and the exit of some shareholders all weighed on the security price on the Australian stock exchange.
The former Babcock & Brown Infrastructure Group opened at A$4.50, an 11% discount to the A$5.08 a share paid by its new cornerstone investor, Canada's Brookfield Asset Management Inc.
Securities in Prime Infrastructure eased further to close at A$4.15, giving the new firm a market capitalization of around A$1.46 billion.
An infrastructure analyst who declined to be named said that hedge funds and other investors in BBI exchanging preference shares, which were converted into ordinary securities representing 16% of the firm as part of the restructure, were selling.
He added that some investment funds have "basically zero interest," after security holders saw their investment in the debt-laden fund fall 98% since May 2007.
The recapitalization, approved by investors on Nov. 16, included a A$625 million placement to Brookfield, a global property and infrastructure investor with more than US$80 billion in assets under management, a A$625 million institutional placement and a A$250 million security purchase plan.
The group reverted to its original 2002 name after investors approved the restructure proposal that included the removal of a unit of failed investment bank Babcock & Brown Ltd. as its manager.
Matthew Spence, head of infrastructure and utilities at Merrill Lynch, says while he's still assessing fair value for the restructured global infrastructure fund, recent news that its most valuable asset — a 26% stake in Natural Gas Pipeline Co. of America — is under a pricing review from U.S. energy regulators is a concern.
"It wasn't something we expected, and they're not going to get a determination for 12 months, but it can't be construed as a positive," Mr. Spence said.
A Prime Infrastructure spokesman wasn't available for comment.
