North America: Brookfield Infrastructure focused on closing Colombian and Indian deals

09 February 2018 - 12:00 am UTC

Brookfield Infrastructure Partners (BIP) said it is focused on acquiring 100% of a Colombian natural gas distribution company and building out its Indian toll road business. 

Speaking on the company’s 4Q17 earnings call on Friday (9 February), executives said they would seek to up the firm’s 11% stake in Gas Natural Fenosa’s Gas Natural S.A. ESP distribution company.

“This will include a private purchase of the remaining interest held by the largest shareholders, as well as a minority tender offer for the remaining minority interest,” CFO Bahir Manios said.

This would imply an equity investment of about USD 600m to acquire nearly 100% ownership, including USD 170m from BIP and the rest from unspecified institutional partners.

Executives said the company is looking to expand in the toll road sector in India, where a number of privatizations are underway.

Inframation understands that BIP was selected with its partner Core Infrastructure India Fund to acquire the Vijayawada Gundugolanu (NH 16) road project from Gammon Infrastructure Projects. It already holds four Indian roads in its portfolio, and is “monitoring some interesting situations in India and into Asia,” he said.

When discussing future opportunities, CEO Sam Pollock said, “As far as M&A activity, it’s very high. So, I think it’s as strong as it’s ever been.”

BIP is also focused on the telecom sector in the US, and sees ample telecom activity in Europe.

Pollock added that there are a number of ports and general infrastructure opportunities in the US that the firm is monitoring and involved with but did not provide specifics. 

In 2017, BIP acquired Nova Transportadora do Sudeste, a Brazilian utility company serving the country’s natural gas sector, from Petrobras. According to the executives, “the business generates stable cash flows, supported by a long-term contract and has no volume risk and inflation index revenues.” 

The executives also said the company closed on a previously disclosed transaction to acquire up to two million smart meters, which will require up to CAD 500m of capital deployment over three years. “This contract significantly expands our smart meter adoptions by growing our potential backlog to 3.5 million meters,” the executives said. 

Responding to a question about future opportunities in the sector, Pollock said there are up to 20 million meters that could come to market as early as 2020. If BIP can take a sufficient market share of that number, “we think we would do very well just given the risk adjusted returns profile here.”

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