Infratil expects underlying earnings to rise in 2017, helped by its retirement village business and has as much as $1 billion to spend on investments.
Underlying earnings before interest, tax, depreciation and amortisation from continuing operations are forecast to be $475 million to $515 million in the year ending March 31, 2017, up from the $455 million-to-$465 million forecast for 2016, the Wellington-based company said in a statement. Infratil is due to report its 2016 results on May 18 and is today holding a briefing for investors on its outlook and strategy.
The 2016 earnings remove the contribution from iSite after Infratil sold the advertising subsidiary to Australian media group QMS Media for $49 million in December while next year's improved forecast reflects gains from its Metlifecare and RetireAustralia investments, it said.
Infratil is on the hunt for new investments, and today said it can deploy between $750 million and $1 billion while staying in its credit metrics. It plans to focus on retirement and renewable energy sectors and its Wellington International Airport holding.
Slides accompanying chief executive Marko Bogoievski's presentation said retirement and renewable energy could absorb its available equity over the next 12 to 18 months, but also showed an appetite for assets on listed markets.
"Public market valuations of some companies in Infratil's sectors do not appear reflective of their underlying value and especially in Australia, companies with attractive assets and weaker values are looking at asset divestment," Infratil said.
"There is also the prospect that market volatility will create investment opportunities for well-capitalised businesses such as Infratil."
The investor is sitting on a large cash reserve after selling its 20 per cent stake in Z Energy and has been looking for new investments, such as its unsuccessful bid for Pacific Hydro.
Infratil today said it's looking at Australian and New Zealand technology prospects to build on its existing portfolio, and has committed US$25 million to California-based Envision Ventures Fund to position itself in that space.
"Infratil's goal is to own businesses that address community needs while delivering efficiency, service and productivity gains to communities," it said. "The technology or 'Infratech' initiative will augment in-house expertise."
The company reaffirmed its goal to pay bigger dividends and said it will consider capital management options if investment opportunities take longer to pan out, or if it sells more assets.
The shares last traded at $3.375 and have increased 3.1 per cent so far this year.