Challenger fund nears end with network sale

Challenger Infrastructure Fund, owned by Australian investment group Challenger, will seek to be wound up following an agreement to sell its last remaining asset – a stake in UK utility network and infrastructure firm Inexus – to Brookfield Infrastructure Partners.

Australian listed fund Challenger Infrastructure Fund (CIF) has entered a binding sale and purchase agreement for the sale of its interests in the UK’s Inexus Group (Inexus) to Canadian fund manager Brookfield Infrastructure Partners – a deal potentially worth £35.6 million (€44.4 million; $55.4 million).

The deal comprises an initial £10 million payment when the sale completes, which is subject to CIF unit holder approval and is expected to happen in September; plus a deferred payment of £25.6 million subject to Inexus successfully refinancing its debt facilities and receiving regulatory antitrust approvals in the UK and Jersey. An outcome with regard to this contingent payment is expected by the end of the year.

In a press release issued by CIF, it was announced that – at the same meeting where unit holder approval will be sought for approval of the Inexus sale – approval will also be sought for CIF to be wound up. This follows a strategic review of the fund, initiated by Challenger Management Services and Rothschild in August 2011, which had involved a global search for investors in CIF and its assets.

“The sale of Inexus represents the effective completion of the strategic review and follows a rigorous process that has been ongoing for almost a year,” said CIF chief executive Emil Pahljina in the press release. “On receipt of unit holder approval and settlement of the sale of both assets [including the sale of tank storage operator LBC to Dutch pensions APG and PGGM, which was agreed earlier this month], the board will initiate the wind up of CIF and the distribution of its cash to unit holders.”

Pahljina said the board expected to make an initial distribution of A$1.28 per unit in September in addition to a recently announced A$0.05 per unit distribution to be paid on 31 August. The balance of CIF’s cash, including the net proceeds of any contingent payment for Inexus, “will be distributed to unit holders on the wind up of CIF”.

Inexus, which is based in Cardiff, Wales, is involved in the design, construction, ownership, operation and maintenance of utility networks and their associated infrastructure in the UK mainland. The firm, which focuses primarily on the new build market, has obtained around 500,000 utility connections since 1993.