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Metlifecare shares surge after Infratil, NZ Super Fund buy stakes

Friday 25th October 2013

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Shares in Metlifecare surged, making it the best performer on the NZX 50 benchmark index today, on optimism new cornerstone shareholders Infratil and the New Zealand Superannuation Fund will add value to the retirement village developer and operator.

Infrastructure investor Infratil and the NZ Super Fund, who previously worked together on Z Energy, both plan to hold a 19.9 percent stake in Metflifecare after agreeing to buy shareholdings from Retirement Villages New Zealand, the companies said in separate announcements today. Shares in Metlifecare jumped 7.9 percent to $4.08.

"There's an expectation that Infratil will be able to bring some strategic support to the company," said Anthony Halls, who helps manage more than $200 million at Mint Asset Management, including shares in Metflifecare and Infratil. "That is what the share price seems to be saying. They think they will be a more supportive shareholder and be able to bring more value than what the previous shareholder did."

Infratil and the NZ Super Fund had a big payday when they each sold a 30 percent stake in Z Energy in an initial public offering in August, having used their financial strength to buy the former Shell assets when markets were still reeling from the global financial crisis.

Retirement Villages New Zealand first sold down some of its Metlifecare holding as part of the retirement operator's merger last year with Vision Senior Living and RVG's Private Life Care business. Vision's private equity shareholders had been Goldman Sachs and Arrow International.

The sale of the stake "is a good thing," said Mint Asset Management's Halls. "It takes away the overhang from RVG. Infratil are fairly proven at adding value to the businesses they invest in so there is probably an implicit expectation in the share price now that Infratil is going to be able to add some value there as well."

Shares in Infratil rose 1 percent to $2.575 today.

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