Brookfield Infrastructure Partners (BIP) decided to monetize its Australian regulated business and reinvest the proceeds in more lucrative businesses. The partnership has entered into an agreement to sell its 42% interest in an Australasian regulated distribution business for $ 410 million (NZ$525 million).
Brookfield Infrastructure acquired its initial interest in the business in 2009 as part of the recapitalization of Babcock & Brown Infrastructure (“BBI”). Brookfield invested nearly $1.1 billion for the recapitalization of BBI.
The partnership follows the practice of divesting its mature assets and reutilizing the proceeds in more profitable businesses. It started in Jun 2009, when the partnership sold its interest in Brazilian transmission investments for $275 million acquired in 2007. Last month, the partnership decided to sell its interest in the U.S. Pacific Northwest timberland operations for $790 million.
Brookfield Infrastructure aims to have a globally diversified portfolio of high quality infrastructure assets that will generate sustainable and growing distributions over the long term for its unitholders. It aims for a 3% to 7% increase in the cash distribution rate.
The partnership intends to grow through both organic and inorganic means. In 2012, the partnership invested $1.4 billion to acquire high quality infrastructure assets for its utilities, transport, and energy platforms. Brookfield Infrastructure will also invest in infrastructure assets in 2013, to further strengthen its asset portfolio and return more to its unitholders.
However, the recovery in the global economy is still patchy with varying levels of consumer confidence. Austerity measures adopted by the government do not improve the picture either. We presently retain a Zacks Rank #4 (Sell) on Brookfield Infrastructure.
Other well-placed operators in the sector presently carrying a favorable Zacks rank are Companhia Paranaense de Energia (ELP), Integrys Energy Group Inc. (TEG) and MGE Energy Inc. (MGEE). All the companies presently carry a Zacks Rank #1 (Strong Buy).
Toronto, Canada-based, Brookfield Infrastructure was founded in 2007. The partnership owns and operates infrastructural assets on a global scale. The high quality, long life assets allow the partnership to generate consistent cash flow.
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