‘Natural opportunity’: Infratil ups Contact Energy shareholding to 14% for $437 million

Infratil (ASX:IFT) has acquired a further 4.92% shareholding in Contact Energy (ASX:CEN), buying the chunk from TECT Holdings (formerly known as Tauranga Energy Consumer Trust) as TECT looked to “diversify” away from energy.

Listen to the HotCopper podcast for in-depth discussions and insights on all the biggest headlines from throughout the week. On Spotify, Apple, and more.

The acquisition saw Infratil pay $8.95 per Contact share, up to $437.7 million, and brings the investor’s control in the energy producer up to 14% as it stands.

The investment company had already carried a hair over 9% in Contact after it sold a 51% interest in Manawa Energy to Contact Energy in July. Contact had forked out NZ$186M and a shareholding for that bumper merger.

Infratil has issued 17.6 million new shares at $12.43/sh to finance this deal – the remaining $218.8M will be financed by new debt and holdings, Infratil confirmed.

“We’ve worked alongside Infratil for more than 30 years through Trustpower and Manawa, and we’re delighted to maintain that partnership by becoming an Infratil shareholder,” TECT boss Wayne Werder said today.

Infratil chief executive Jason Boyes said the October acquisition was mutually beneficial for both parties. “TECT’s decision to diversify created a natural opportunity for us to increase our investment in Contact,” he explained to holders.

The way Infratil has shaped the deal also keeps it fluid, he added. “Part-funding with new shares efficiently preserves flexibility for future growth while increasing ownership of a strong cashflow-generating business.”

IFT heads into Week 43 at $11/sh. CEN last sold at $7.90.

Join the discussion. See what HotCopper users are saying about Contact Energy Ltd and Infratil Ltd and be part of the conversations that move the markets.

The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.