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NZ Super Fund in A$2.17 billion takeover bid for Aussie toll road operator

Monday 26th September 2011 1 Comment

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The New Zealand Superannuation Fund will keep its current stake in Australian toll road operator ConnectEast Group if a proposed A$2.17 billion takeover goes ahead.

The local pension fund is part of a consortium of investors offering 55 Australian cents per share in a bid for the 65% it doesn’t own of the ASX-listed company, which it proposes to de-list and take private.

ConnectEast owns and operates the 39 kilometre EastLink toll road in Melbourne.The so-called Cullen Fund, named for its architect former Finance Minister Michael Cullen, holds a 9.2% stake worth NZ$217.2 million as at June 30, in ConnectEast, and will keep its ownership stable if the deal gets the go-ahead.

The fund will put up A$12.4 million to subscribe to the deal, according to the Horizon Investor Subscription Deed filed to the ASX. “Our investment hasn’t changed, and will only move by a percentage point or so,” spokesman Paul Gregory said.

The investment consortium’s vehicle, Horizon Roads, will be managed by Australian infrastructure fund manager CP2, which failed in a similar takeover bid for Melbourne’s CityLink tollway operator Transurban Group last year.

The NZ Super Fund also has a NZ$279.8 million stake in Transurban. CP2 raised A$1.4 billion from its investor group to fund the bid, including the Cullen Fund, Universities Superannuation Scheme, the Netherland’s APG, the National Pension Service of Korea, China Investment Corp., ATP, the Teachers Insurance and Annuity Association of America and the Korean Teachers Credit Union.

ConnectEast shareholders will vote on the proposal tomorrow. Investors also have the option to take securities in an unlisted registered management investment plan in lieu of payment.

In July, the company’s board recommended shareholders accept the offer, saying it represented a premium of 22.4% to a volume weighted average price for the stock.

The stock was rated a ‘hold’ based on the consensus of 13 recommendations compiled by Reuters.Trading in the shares was halted today, after they rose 1% to 48.5 Australian cents yesterday.

The NZ Super Fund reported a 25% return after fees in the 12 months ended June, its best year since its inception in 2003.

Since then, the fund has taken a hit in the global markets turmoil after the United States’ triple-A credit rating was downgraded and Europe’s sovereign debt crisis seems likely to spread.

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Comments from our readers

On 26 September 2011 at 9:00 pm Ravin Malarao said:
Too many eggs in one basket is generally dangerous
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