MIIF in modest payout despite IPO flop

The Macquarie fund has returned more cash than expected to shareholders, even after a disappointing IPO of its Taiwan portfolio company.

Although the much-anticipated initial public offer (IPO) of Asian Pay Television Trust (APTT) on the Singapore stock exchange was less than stellar, the Macquarie International Infrastructure Fund (MIIF) has managed to distribute a total of S$522.1 million (€7.3 million; $9.5 million) to shareholders in cash.

APTT is a vehicle aggregating Macquarie's stakes in the Taiwan Broadband Corporation (TBC), Taiwan's largest cable TV operator. As part of the listing, MIIF sold its 47.5 percent stake in TBC to APTT for a minimum valuation of S$469 million. MIIF will still hold a 3 percent stake in APTT overall, according to a MIIF spokeswoman.

On the first day of APTT’s float, Bloomberg called it the “the world’s worst IPO this year” in terms of first day performance. Although the IPO raised a total of S$1.4 billion, according to the Singapore Stock Exchange, share price fell by more than 8 percent over the course of the first day. Since then, the trust’s share price has improved only modestly.

The proceeds from the IPO, however, were more than MIIF had budgeted for, and thus the fund chose to go forward with the sale of TBC to APTT, Infrastructure Investor understands.

When the transaction was completed on May 29, MIIF originally reported having made S$510.1 million from the sale, and set aside S$12 million to cover any incidental transaction costs that might crop up. The fund has not ended up having to use any of that S$12 million, and so it will be distributed to shareholders accordingly.

MIIF shareholders will received two payouts from the TBC sale: the S$510.1 million that was distributed on May 29, and the S$12 million that will be distributed on June 6, according to a MIIF statement. MIIF will then be fully exited from its largest investment.

MIIF originally invested S$479.2 million in TBC in July 2007, and the cable company comprised 60 percent of MIIF’s portfolio by value. Combined with the S$130.1 million in distributions MIIF has made from TBC since its acquisition, the final sale would give MIIF a modest profit on the investment.

As an infrastructure fund, MIIF has simply never recovered from the global financial crisis, when investors began selling off MIIF stocks more readily because of their need to retire debt, a source close to the matter told Infrastructure Investor previously.

Although MIIF never had a problem with over-leveraging, it was finally determined that “MIIF’s current share price does not adequately reflect the value of MIIF’s infrastructure businesses”, and the fund’s board decided to wind MIIF down. It is now only looking for the best way to maximize value for shareholders, and will not make any further acquisitions, according to statements.