Investment Strategy
Infratil investment strategy has the following characteristics:
| Investments are long-term. Infratil invests in businesses which have the capacity to invest in their facilities and services. Long-term “excess” returns can only be derived from the compounding effect of reinvesting in growth. |
| Infratil chooses sectors which offer patient investors exceptional returns. Each of Infratil’s businesses has the prospect of a “step up “ in value: |
Renewable energy. The global increase in the cost of energy plus the pricing of carbon is producing exceptional returns.
Australian energy. The restructure of the Australian energy market and the incremental trend to gas-fired and renewable generation are both trends which are opening opportunities.
Airports. The huge growth in the world’s population of people financially able to fly (both because of reducing air travel costs and increasing incomes) is increasing airport throughput. In Europe, hub airport congestion is presenting additional opportunities to “urban edge” airports.
Public transport. It is becoming a truism that private cars will not provide urban mobility. The solution to growing city populations is not more vehicles on the road, it is more people in each vehicle.
| Infratil will invest where it has expertise, or can partner with expertise, and where it can influence the strategic and operational directions of the companies it invests in. Infratil's management has world class expertise in respect of airports, energy and public transport. |
| Infratil prefers to invest alongside community interests (City Councils and Community Trusts). Infratil's co-investor in Wellington Airport is the Wellington City Council. In TrustPower it is the Tauranga Energy Consumer Trust. Infratil recognises that infrastructure is part of the community’s social and economic capital. For a long term investor only outcomes which benefit those communities will also benefit capital providers. |
| Infratil’s businesses are operated with the customer as the priority. Whether the service is retail energy, and airport, or a bus ride home, it can be made to suit user needs. Historically infrastructure management made cost minimisation the single priority. It is necessary to be efficient and low cost, but that is not sufficient. The service must also meet user expectations and needs. |
Frequently Asked Questions
Does Infratil have a portfolio or diversification approach?
Diversification is not one of Infratil’s goals. Infratil aims to deliver on its absolute return target of 20% pa. after tax on a long term basis.
Does Infratil focus on maximizing cash flows or value uplift from its investments?
Infratil’s return goals can only be achieved in companies which can invest in their own activities. While cash generation is desirable, it is a means to an end with the goal being value growth through earnings growth over the long-term.
Does Infratil have any regional preferences as to where it invests?
Infratil has businesses in New Zealand, Australia and the United Kingdom.
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