Brookfield Infrastructure Partners (BIP) will consider selling “non-core” assets in order to raise capital for expansion projects or potential acquisitions, the firm’s executives said in a conference call to investors this morning.
John Stinebaugh, chief financial officer of the New York- and Toronto-listed fund, said operational cash flow would not cover the costs of expansion projects, and BIP would consider asset sales or raising equity to fund those projects.
Stinebaugh said BIP would consider selling businesses that are “more mature” and have “less ability to grow”. But he added: “We haven’t given any clarity in terms of which assets would fall into that bucket.”
Expansion projects are scheduled for WestNet Rail, an Australian rail network that BIP took over as part of its acquisition of former Babcock & Brown vehicle Prime Infrastructure.
BIP chief executive Sam Pollock also said BIP is mulling “select opportunities” for acquisitions. He said BIP is considering acquisitions across sectors, though “less so in timber”. He added that the fund was particularly keen to examine opportunities in Europe.
“We think that there are a number of construction companies that have assets not only in Europe but in South America that would like to see us as partners,” Pollock said. He said he saw Europe as a market that “a lot of capital is shying away from”. He also specified utilities as potential targets.
BIP’s announcement follows on the heels of a failed bid for the Abbot Point Coal Terminal in Queensland, Australia. Indian infrastructure conglomerate Adani Enterprises submitted an A$1.8 billion (€1.3 billion; $1.9 billion) bid that exceeded the government’s expectations, beating out competition from BIP, Macquarie, Cheung Kong Infrastructure and RREEF Infrastructure, among others.
Pollock said Abbot Point “would have made a very complimentary investment” to BIP’s existing coal terminal in Queensland, but he said BIP would not pursue acquisitions if “prices get out of range”. When asked by an analyst if the Abbot Point bid would affect another bid BIP is considering – the Dudgeon Point Coal Terminal – Pollock said it was too early to tell.
BIP's funds from operations in the first quarter of 2010 more than doubled relative to the year prior, BIP said in a statement. BIP attributed that increase to the merger with Prime Infrastructure.
BIP’s New York-listed shares were up 5.25 percent at press time, standing at $24.06.