Infratil to raise $1.15b as NZ market sinks

New Zealand shares fell in subdued trading conditions, driven partly by investors selling out of other positions to participate in Infratil’s mammoth $1.15 billion capital raising.

Monday, June 17th 2024, 6:33PM

by BusinessDesk

The S&P/NZX 50 Index fell 166.39 points, or 1.4%, to 11,698.51. Within the main board, 78 stocks fell, 50 rose, and 53 were unchanged. Turnover was $118.4 million, with just five companies trading on volumes of more than a million shares.

Trading of Infratil shares was halted at $10.89 before the market opened as the infrastructure investment firm kicked off plans to raise $1.15b to fund the next round of growth at its CDC datacentre business.

The first tranche of the equity raising is $1b through an underwritten placement to institutional investors at $10.15 a share, followed by a $150m retail offering that may be scaled or accept oversubscriptions.

“Infratil has obviously been a superstar. People will be queueing up to add some extra funds, and I doubt they’ll be troubling the underwriter,” Grant Davies, an investment adviser at Hamilton Hindin Greene, said. “The CDC datacentres are proving to be a very, very good investment for Infratil.”

Davies said some investors would be selling out of other positions to participate in the placement, adding to the negative lead out of Europe on Friday, where there was some concern about the upcoming French election.

Electricity generator retailers also weighed on the market after operating figures from Contact Energy and Meridian Energy showed hydro storage at 72% of the historical average.

Mercury NZ, which also signalled plans to raise $300m through a capital bond offering, fell 3.1% to $6.48, Contact was down 2.8% at $9.17, and Meridian declined 1.6% to $6.27. Genesis Energy slipped 2% to $2.195.

Sour milk

Dairy companies led the benchmark index lower, with Synlait Milk falling 6.3% to 30 cents, A2 Milk declining 3.7% to $7.21, and Fonterra Shareholders’ Fund units slipping 0.5% to $4.10.

Data out of China, NZ’s biggest dairy market, was mixed, with better-than-expected retail sales contrasting with weak house prices and softer industrial output and fixed asset investment.

Freightways fell 2.3% to $7.97 ahead of local gross domestic product figures this week. The courier and information management company is often seen as a bellwether for the strength of the local economy.

Spark NZ was the most heavily traded company, with 2.3m shares changing hands. It slipped 0.3% to $4.03.

Among other companies trading on volumes of more than a million, Tower declined 0.6% to 83.5 cents with 1.2m shares traded, Precinct Properties NZ fell 3.8% to $1.13 on a volume of 1.1m, and Auckland International Airport decreased 0.6% to $7.43 with 1m shares traded.

Building products companies were also weaker, with Fletcher Building down 3.7% at $2.89, Vulcan Steel declining 2.9% to $7.50, and Steel & Tube slipping 3.2% to 91 cents.

Steel & Tube last week warned its June year earnings would fall short of analyst forecasts, while across the Tasman, BlueScope Steel was downgraded by Jefferies due to the weak construction market in Australia and NZ.

Separately, Real Estate Institute figures showed the housing market remained subdued.

Metro Performance Glass bucked the trend, climbing 6.1%, or 0.4 of a cent, to 7 cents, the biggest gain across the main board for the day.

Firms enjoying a positive day were largely outside the benchmark index, with Rakon up 5.3% to 79 cents, Winton Land advancing 5.2% to $2.02, Savor rising 4.8% to 22 cents, and My Food Bag climbing 4% to 15.8 cents.

Oceania Healthcare was the best performer on the benchmark index, up 1.9% to 54 cents. A recent report from Jarden analysts was optimistic about the government looking at aged care funding.

Among other retirement village operators and developers, Ryman Healthcare fell 2.9% to $3.65 with 1.4 million shares traded, Summerset declined 2.1% to $9.30, and Arvida Group was unchanged at 92 cents.

Kiwifruit orchardist Seeka was unchanged at $2.40. Primary sector investment manager MyFarm on Monday unveiled a $190m investment vehicle rolling up 11 kiwifruit partnerships into a single entity, with 13 Bay of Plenty and four Northland SunGold properties producing more than 2 million trays of fruit.

NZX was unchanged at $1.05 after another company signalled plans to delist from the stock exchange and migrate to the USX bourse. Geneva Finance was unchanged at 26 cents after flagging its intentions and sending a notice of meeting to its investors for July 5.

Tags: Market Close