Listed infrastructure investor Infratil is option rich in ways to spend its money after overhauling its portfolio and says US renewable energy projects show a lot of promise.
The Wellington-based firm has $630 million of funds available having spent $560m on new investments and a further $168m on capital expenditure in the year ended March 31.
After selling stakes in Z Energy, Lumo and iSite in 2016, Infratil found itself flush with funds and keen on investing in renewable energy, the retirement sector, social infrastructure - such as housing - telecommunications infrastructure, and waste management.
In the latest financial year, some of that capital was redeployed with Infratil buying stakes in Canberra Data Centres, establishing US renewable energy firm Longroad Energy, carving out Trustpower's wind energy business into a separately listed entity Tilt Renewables, and investing in ANU student accommodation.
Chief executive Marko Bogoievski on Thursday told analysts in Wellington that puts Infratil "at the front end" of most infrastructure investors and exposed to big upside capital gains.
"We have these multiple positive exposures to what we think are very favourable long-term trends that we can expose our capital to," Bogoievski said.
While that made it difficult for analysts when valuing the company, "holding that many options and real management capability outweighs the conglomerate discount," he said.
Infratil's Longroad investment was singled out as offering major opportunities for the company.
Longroad was established with the New Zealand Superannuation Fund and has enlisted a team of managers with a track record in the US, having set up a similar venture in 2002 that developed 38 utility scale projects with 4000-megawatt capacity, eventually selling 12 years later for more than US$2 billion ($NZ2.9b).
Infratil, NZ Super and the management team committed $US100m to develop renewable projects, which Bogoievski said fully funded development opportunities.
"Our capital is prepared to position itself in development focus, but can and will construct and hold assets if we think there are better returns from that," and Bogoievski said Infratil has a "positive bias" towards those opportunities.
"I'd keep an eye on this one, it could easily generate at least options for deploying capital much larger than what we've flagged earlier," Bogoievski said.
The shares last traded at $3 and have declined 11 per cent in the past 12 months while the benchmark S&P/NZX 50 Index gained 5.6 per cent.