KEY POINTS:
Infratil says the outlook for new acquisitions is at its most favourable for years as the global credit crunch squeezes asset owners and puts private-equity players on the back foot.
The infrastructure investor yesterday reported a first quarter net profit of $45.9 million compared with $7.7 million for the same period a year ago.
This year's result was inflated by the consolidation of Trustpower's earnings and the reporting of a big increase in the value of financial derivatives required under new accounting standards.
The company, which yesterday revealed it had built up a 6.2 per cent stake in at-play Auckland International Airport, has announced a $175 million rights issue.
The funds will be used as a war chest for acquisition opportunities.
"Because of the type of leverage that there's been in capital markets for the last three or four years, some people will be caught short and we want to be in a strong position that if an opportunity arises, we're there to take advantage of it," said chief executive Lloyd Morrison.
Infratil had a relatively modest gearing ratio of 40 per cent, with most of that in long-dated bonds, which means it is insulated from rising credit spreads.
"We've certainly got ourselves in a very comfortable position," Morrison said. "Over the last two or three years opportunities have been very competitively bid for. Over the next two to three years there won't be so many bidders ... a lot of people won't have the capacity they once had."
The rising cost of funds would also place pressure on some heavily geared owners of assets. "In that sort of environment we want to be one of the strong guys who sort problems out for others."
Morrison refused to say where Infratil was looking other than it was in the same sectors where it already has investments including renewables energy, public transport and airports.
He said all of Infratil's operations had performed in line with expectations over the three months to June.
Infratil Energy Australia posted a $6.1 million operating loss against a $2.2 million gain a year ago, mainly due to the cost of strong growth in its retail customer base and high wholesale energy prices.
Those high prices resulted in a big increase in the value of its energy hedging contracts which had inflated Infratil's overall bottom line and its tax liability.
Trustpower, 50.1 per cent owned by Infratil, contributed operating earnings of $51.3 million, a "satisfactory" result given "relatively unfavourable conditions" over the quarter.
Wellington Airport's result was "solid" and Infratil Airports Europe's quarter was slightly ahead of a year ago due to an improved performance from passenger services.
The performance of NZ Bus was on budget despite disappointing passenger numbers, particularly in Wellington.
Infratil shares closed 7c lower at $2.75.
