Spark Infrastructure opts for capital raising over sale

The listed Australian infrastructure investor, which is jointly owned by RREEF Infrastructure and Cheung Kong Infrastructure, has concluded a strategic review by deciding to embark on a new capital raising exercise rather than sell full or partial stakes in its management company and/or investee firms.

Australian utility investment specialist Spark Infrastructure (Spark) has concluded a strategic review by opting to focus on growth opportunities for its three portfolio companies. To this end, it has launched a ’2 for 7’ entitlement offer of new stapled securities in Spark to raise A$295 million of new capital.

In a statement to the Australian Stock Exchange, Spark said it had considered a range of options including “consideration of full and partial sales of Spark Infrastructure and its 49 percent interests in the asset companies”. It said it had received a number of proposals including one “at a significant premium to current market price”.

However, Spark claims the proposal was “highly conditional” and involved a “lengthy” due diligence process” that created “significant execution and timing risks which were considered unacceptable”.

Spark power assets:
not for sale

The firm will now focus on its existing three assets, in which it has a 49 percent stake in each: CitiPower, which provides electricity to 301,771 customers in parts of Melbourne; Powercor, which delivers energy to 683,610 customers throughout central and western Victoria; and ETSA Utilities, which distributes electricity to 803,251 customers in South Australia. The remaining 51 percent stakes in each business are held by Cheung Kong Infrastructure and Hong Kong Electric.

“The asset companies are entering an exciting period of growth,” said Spark chairman Stephen Johns in the statement. “The Australian energy regulator has approved capital expenditure over the next five years that will drive increased growth in their regulatory asset bases, and correspondingly increased revenues.”

Spark is owned 50 percent by Cheung Kong Infrastructure, the largest publicly listed infrastructure company in Hong Kong, and 50 percent by RREEF Infrastructure, the infrastructure investment arm of Deutsche Asset Management.