Infratil to sell 50% stake in RetireAustralia for $300m
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The news: Infrastructure investor Infratil has agreed to sell its 50% stake in retirement village operator RetireAustralia for $300 million.
The numbers: Infratil and the New Zealand Superannuation Fund, which both own a 50% interest in RetireAustralia, will sell their combined 100% holding to Invesco Real Estate for $845 million.
Infratil said it expects to receive $300 million following completion of the sale, with final proceeds to be adjusted for transaction costs and other adjustments.
At 31 March, the carrying value of Infratil's investment in RetireAustralia was NZD404 million ($369 million), with the sale expected to result in an accounting loss of around NZD80 million. Infratil said the sale proceeds are set to preserve almost all contributed capital, delivering an internal rate of return close to zero over the 11-year holding period.
The context: The deal remains subject to a number of conditions, including approval by the Foreign Investment Review Board, and is expected to complete in the final quarter of the 2025 calendar year.
Infratil initially invested $215 million in RetireAustralia in 2014. Chief executive Jason Boyes said this morning that the sector has faced "a number of challenges" during the period which have contributed in Infratil "not being able to fully realise our ambitions for the RetireAustralia business".
What they said: "Although at a loss, the decision to sell RetireAustralia is consistent with the strategy outlined at our full-year result, where we indicated our intention to divest businesses unlikely to scale under our ownership to increase balance sheet flexibility for reinvestment," said Boyes.
"When Infratil made its initial investment of $215 million in December 2014, our market capitalisation was NZD1.6 billion. With a market capitalisation now exceeding NZD11 billion, and despite a positive outlook for the business, it is increasingly difficult for an investment of this size to deliver meaningful returns for Infratil shareholders."
The source: ASX
