Macquarie Asia fund in major divestment

Macquarie International Infrastructure Fund’s shareholders voted overwhelmingly in support of the fund’s divestment of its largest investment.

The special general meeting of Macquarie International Infrastructure Fund (MIIF) in Singapore concluded with shareholders voting “overwhelmingly” in support of the firm’s proposed resolutions – namely, the divestment of its stake in Taiwan Broadband Communications (TBC) and a capital reduction – according to the firm.

MIIF proposed to divest its 47.5 percent stake in TBC at the beginning of April by listing the company on the Singapore Exchange Securities Trading. The initial public offer (IPO) is expected to raise at least S$469.5 million (€289 million; $381 million).

The shareholder vote on Tuesday was over 99 percent in favor of the divestment plan, according to MIIF. However, almost a quarter of shareholders abstained from voting on that particular proposal.

TBC is one of the three leading television operators in Taiwan, and provides cable television services to over one million homes, according to the MIIF website. MIIF originally acquired TBC in July 2007 for S$479.2 million. MIIF has already made S$130.1 million in distributions from TBC since its acquisition, Infrastructure Investor understands.

The value of TBC makes up over 60 percent of MIIF's portfolio at this point.

Macquarie declined to comment further on the divestment, but a source close to the matter told Infrastructure Investor that although the fund has looked at trade sales as a divestment option for TBC, all valuations have been below the minimum requirement of S$469.5 million. The public markets in Singapore, on the other hand, have been more stable.

Over 97 percent of shareholders voted in favor of the capital reduction resolution, which means that MIIF will be able to distribute the returns of all its future sales, including the TBC divestment, as capital rather than as a dividend.

The two approved proposals are reflective of MIIF’s resolution last year to begin “winding down” the fund, when it was determined that “MIIF’s current share price does not adequately reflect the value of MIIF’s infrastructure businesses.” The fund has been under pressure since the global financial crisis, when investors began selling off MIIF stocks more readily because of the need to retire debt.

According to the source, although MIIF has never had a problem with leverage, the fund has simply never recovered. In December, MIIF’s board concluded that the fund’s strategy had to fundamentally change in order to “maximise value for shareholders,” according to firm statements.

This revised strategy will eventually “lead to the winding down of MIIF.” In the meantime, the fund will make no further acquisitions, according to statements.