Infratil, NZSF sell stakes in Z Energy

The New Zealand funds have divested their combined 30% holding in petrol retailer Z Energy, making handsome returns in the process.

Wellington-based investment fund Infratil and New Zealand’s state-run pension fund New Zealand Superannuation Fund (NZSF) announced that they have sold a combined 30 percent interest in Z Energy via a block trade for NZD$6 (€3.53; $3.96) per share. 

Infratil has fully exited Z Energy by selling its entire 20 percent stake while NZSF has sold a 9.725 percent interest in Z Energy in the transaction. NZSF will keep approximately 10 percent of Z Energy following the sale. 
After sales costs, the net proceeds from the sale of Infratil’s 20 percent stake are NZD$479.2 million resulting in a gain on the sale of the 20 percent interest of NZD$392.2 million, subject to the finalisation of its share of Z Energy’s earnings for the six months ended September 30 and sales costs. 
Infratil chief executive officer Marko Bogoievski said that Infratil was a strong supporter of the Z Energy business and its proposed acquisition of Chevron New Zealand. 
“While we are positive about the outlook for the business, the current market provided an opportunity for a clean exit and the flexibility to recycle capital into new growth opportunities,” said Bogoievski, who will continue to act as a director of Z Energy. 
Infratil advises that following the completion of the sale, the net debt of the wholly owned group of Infratil companies will be approximately NZD$310 million, comprising infrastructure bonds of NZD$989 million, other drawn debt of NZD$74 million and cash balances held of NZD$753 million.
NZSF’s chief investment officer Matt Whineray said that Z Energy had been one of the fund’s top performing investments globally. 
“Reducing the fund’s stake allows us to further diversify our portfolio and realise value from what has been a successful investment. We remain positive about the company’s future prospects and look forward to continuing our relationship,” he said. 
NZSF said that it has now received NZD$784.6 million in proceeds from the investment while the value of the fund’s remaining stake is NZD$246.6 million at the block trade sale price. It reflects a gross return of 50 percent per annum over the five-year investment period to date. 
In 2010, Infratil and NZSF each paid NZD$210 million to acquire a 50 percent stake in Z Energy from Shell New Zealand. Later in August 2013, Z Energy was partially listed on the New Zealand Exchange and Australian Securities Exchange, with Infratil and NZSF reducing their respective holdings in the company to 20 percent.
Deutsche Craigs New Zealand and Deutsche Bank Australia are book runners for the sale, according to a Reuters report.