In a concerted effort to augment the organic growth of its business, infrastructure service provider Macquarie Infrastructure Company LLC (MIC) recently completed the divestiture of its district energy unit and invested the proceeds in its existing businesses. However, no visible effects were seen on the stock as share prices traded relatively flat at $71.68 on Friday, largely due to the fact that the long-term effect of the reinvestments is yet to be recognized.
Macquarie sold its subsidiary Thermal Chicago Corporation to an entity managed by utility firm Brookfield Infrastructure Partners L.P. (BIP) for $270 million. Thermal Chicago provides district cooling services to business owners and managers in downtown Chicago by offering chilled water for air-conditioning large condominium, commercial, and industrial facilities. These include condominium and apartment buildings, theaters, hotels, financial institutions, data centers, retail centers, schools, as well as Class A, B, and C office buildings. Thermal Chicago also owns and operates stand-alone heating and cooling facilities at a major metropolitan airport and at a major Las Vegas casino complex.
Macquarie had a 50.1% ownership stake in Thermal Chicago with the remainder being held by a unit of the John Hancock Life Insurance Company (U.S.A.) – an operating unit of Manulife Financial Corporation (MFC). Despite having an internal rate of return of over 20% from Thermal Chicago, Macquarie decided to divest it to concentrate on its existing high-margin businesses. The company expects to redeploy about $60 million of the net proceeds from the asset sale as reinvestments in business.
Macquarie owns and operates a diversified group of infrastructure businesses in the U.S., including a gas processing and distribution business, Hawaii Gas, several entities comprising a Contracted Power and Energy segment, and an interest in a bulk liquid storage terminal business called International-Matex Tank Terminals. The company also owns and operates an airport services business titled Atlantic Aviation.
Macquarie presently has a Zacks Rank #2 (Buy). Another stock in the industry worth mentioning includes ITT Corporation (ITT), which has the same rank as Macquarie.
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