Wednesday, 21 September 2011

Canadian exit from Transurban

The Sydney Morning Herald reports on the Canadian Pension Plan having sold its cornerstone stake in toll-road company Transurban for A$903 million(US$919 million). Transurban is best known for owning the lucrative Melbourne Citylink, six toll roads in Sydney, and the I-495 HOT lanes and Pocahontas 895 in Virginia, USA.

The deal is a sale of almost 170 million shares - about 12 per cent of the issued capital - for A$5.23 a piece. The block trade was picked up by a range of mostly domestic institutional investors.

The paper also notes that recently that another fund, the Ontario Teachers Pension Fund has taken advantage of the strong Australian dollar by swapping its stake in Sydney Airport and paying A$791 million (US$805 million) in cash for MAp Airports' (formerly Macquarie Airports) cornerstone holdings in two European airports (Brussels and Copenhagen).

It’s a fairly obvious transaction. With the Australian dollar so high, it makes sense to cash in investments on the Australian market, and hunt around for cheap deals in Europe and the US, where currencies are low and the market (and prices) are subdued. The bigger question is where to invest, given the prospects for toll roads in some locations (e.g. Greece) look rather dire. Some wise modeling and forecasting will be needed to ensure that bargain prices are indeed what is obtained.

Shares dropped on the news of the exit.

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