IFT - Infratil

[Jaa]

So IFT management are getting
"luckier"?
+/- They are getting better?
+/- The investing environment is improving?

Or they are taking larger risks?

[tango]

Not your maths, Tango. Link seems to have their own allocation system which differs from the advised pro rata allocation.

Thanks. I was starting to question myself.
Strange pro rata system

[Snoopy]

Those clever people at Goodman plan to just convert their Aus logistical warehouses into data (warehouse) centres, either themselves or by offering ready to build sites complete with power and internet connectivity to the hyperscalers. How do you compete with that?

I don't follow Goodman in Australia. But I am surprised they would retrofit, or even bowl and rebuild. a former logistical distribution site into into a datacentre. I don't know what the zoning restrictions are like in the larger Australian cities. I presume they are less restrictive than Auckland. From what I can gather, the siting of a logistics centre is quite important, to minimise those 'source to target' incoming and outgoing freight delivery times. But a datacentre can probably be anywhere, up to 50km away from 'communications central'. That means that if Goodmans have already optimised their prime sites around logistics, it would be the logistics tenant that would logically pay a higher price for the use of that land/building. The only reason I could see Goodman using this 'alternative tenant' tactic, is to try and squeeze a bit more rent out of the logistics tenants, by telling them data centre operators are 'sniffing around' and would be keen to take over the tenant's space.

SNOOPY

[777]

Refunds have been paid today.

[kiora]

Or they are taking larger risks?

No I don't think so,do you?

IFT Investment Risk

I venture IFT investment risk is far less than the majority of companies on NZX ?

IFT assets are spread across different thematics with Infratil businesses operating in 17 countries across Australasia, North America, Asia, Europe and the United Kingdom.
Digital 62%
CDC,One NZ,KAO Data,Forty South,Clearvision
Renewables 22%
Manawa Energy,Longroad Energy,Gurin Energy,Galileo,Mint Energy
Healthcare 11%
Retire Australia,QScan,Auckland Radiography
Airports 4%
Wellington

All IFT businesses share a common trait: they deliver essential services to the communities they serve.They are not cyclical

All stakeholders are well aligned
Management,shareholders,customers

Capital Management & Risk

The use of debt is bound by Infratil’s policy of maintaining credit metrics that are broadly consistent with an Investment Grade Credit Rating (Infratil is not credit rated) and with maintaining availability of funds for investment purposes.
The majority of the debt is held in the subsidiaries.
Even before the capital raising equity was 80%
With net bank and dated bonds and perpetual bonds at 20% in total

To manage foreign currency risk, Infratil aims to ensure cash flow certainty by hedging once foreign currency cash flows are sufficiently certain, and by seeking to offset exposures whenever possible.

The majority of the future cashflow is secured through long term contracts before funds are invested

In summary
Risk/return +++++

[Toddy]

Great post. And hopefully they are disposed of their riskiest asset in the near future. Wellington Airport.

[Jaa]

I don't follow Goodman in Australia. But I am surprised they would retrofit, or even bowl and rebuild. a former logistical distribution site into into a datacentre. I don't know what the zoning restrictions are like in the larger Australian cities. I presume they are less restrictive than Auckland. From what I can gather, the siting of a logistics centre is quite important, to minimise those 'source to target' incoming and outgoing freight delivery times. But a datacentre can probably be anywhere, up to 50km away from 'communications central'. That means that if Goodmans have already optimised their prime sites around logistics, it would be the logistics tenant that would logically pay a higher price for the use of that land/building. The only reason I could see Goodman using this 'alternative tenant' tactic, is to try and squeeze a bit more rent out of the logistics tenants, by telling them data centre operators are 'sniffing around' and would be keen to take over the tenant's space.

SNOOPY

That Livewire link had some details Snoopy. More about using their existing land bank and developer expertise/contacts than converting existing sites.

Goodman has acquired land and pre-arranged council approvals and power connectivity it can use to develop its own data centres or sell as a ready parcel to big tech.

The company’s current data centre pipeline opportunity is around $20 billion, but the market is currently pricing “less than half of this potential opportunity at ~A$9 billion”.

The Goodman website has more details, they have developed way more capacity than CDC for example.

Our global power bank of 4.3GW includes completed facilities, secured power and potential data centre projects across 12 major international cities. This has been built up over time through our expertise in securing land, planning and power in highly sought after locations in major global cities.

Goodman has delivered 0.6 GW of data centres and powered sites globally for its hyperscale and co-location customers.

Goodman's buy, prepare, build, sell to the hyperscalers strategy is far less risky than CDC and Kao Data's build to own strategy.

[Jaa]

No I don't think so,do you?

I do.

Infratil has always owned a mix of assets that as you state does lower risk. So that is not new.

What is new is that a significant chunk of their market cap is now in a hot boom and bust sector that is clearly in bubble territory. Data centres are simply not that rare or hard to build compared to ports, airports, hydro power or even radiologists. Outside of Canberra I do not believe they have a moat.

Infratil face competitors far bigger than themselves, with a much lower cost of capital and far greater domain knowledge in an industry with fast changing technology. That is all new for Infratil and thus it has to be riskier.

Maybe you missed Wall Street's scepticism in the article I shared where Barclay's state all the data centre construction currently underway is enough to "power the existing internet, plus 12,000 new applications with the user base and input demands of ChatGPT."

[Jaa]

Great post. And hopefully they are disposed of their riskiest asset in the near future. Wellington Airport.

Why would they sell their best asset?

They should sell CDC before the bubble bursts.

I also have no idea why they are throwing a lazy $US100m at "IoT, Big Data, and Security" venture fund, Clearvision Ventures. There goes half the money from the retail offer. Investors are paying fees on top of fees on that one. The only investment they disclose, Chargepoint Holdings has done terribly. Must be cool to visit Sand Hill Road and chit chat though.

[kiora]

I do.

Infratil has always owned a mix of assets that as you state does lower risk. So that is not new.

What is new is that a significant chunk of their market cap is now in a hot boom and bust sector that is clearly in bubble territory. Data centres are simply not that rare or hard to build compared to ports, airports, hydro power or even radiologists. Outside of Canberra I do not believe they have a moat.

Infratil face competitors far bigger than themselves, with a much lower cost of capital and far greater domain knowledge in an industry with fast changing technology. That is all new for Infratil and thus it has to be riskier.

Maybe you missed Wall Street's scepticism in the article I shared where Barclay's state all the data centre construction currently underway is enough to "power the existing internet, plus 12,000 new applications with the user base and input demands of ChatGPT."

Good to hear some contra thoughts Jaa

I'm always interested in investing in companies in NZ that reward their shareholders with higher compounding returns than IFT has over 30 years.

OR does an investor need to be a "sharp" trader or invest offshore?