Friday, November 13, 2009

What Infratil sale of Auckland Airport stake means

The sale of Infratil Ltd [IFT.NZ] 3.87% stake in Auckland International Airport to institutions [AIA.NZ] 3 days ago at first look might not seem good news for existing shareholders.

All is not lost however!

Infratil management state that their reason for selling was "consistent with recent capital management initiatives and provided additional flexibility to fund current and future opportunities".

That means they pretty much took a bath on their short term punt on the airport being sold 2 years ago and when the brakes were put on it by the outgoing Labour Government they held on for too long.

Of course another port sale could be way off in the distance but an investigation into the relaxing of the rules of "sensitive strategic" assets by the National Government earlier this year means that this would be more likely given another bid for the airport.

What is more important to Auckland International Airport shareholders is that the company is doing OK during the current downturn -stagnant profits are all the rage - and is likely to do significantly better in the long term.

The Canadians and Arabs were willing to pay 100% more than the current share price (oh that seems so long ago) so there is still value left in the near monopoly company that is the Auckland Airport.

And that fellow shareholders is the way you should be looking at the Ifratil sale.


Disclosure: I own AIA shares




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