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Infratil's review may lead to sale

DAVE BURGESS
Last updated 05:00 17/07/2014

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NZX-listed Infratil has moved further down the strategic review road which could see it sell some of its Australian-based energy assets, possibly worth about A$280 million (NZ$298m) and a sale is seen as likely, according to one analyst.

Infratil Energy Australia (IEA) is negotiating with selected parties who expressed interest in its assets including outright purchase and merger combinations.

There are three businesses under the IEA banner - retailers Lumo Energy, IEA Generation which owns four small-scale "peaker generators" in South Australia and New South Wales, and utilities connection service Direct Connect.

Infratil executive Tim Brown said the review process covers all three businesses.

The reasons behind the review were outlined in Infratil's 2014 annual report.

It said since the sale of electricity to residential customers was deregulated in Victoria in 2004, Lumo has emerged as "by far the largest and most successful of the new entrants" into the market.

It also said the Direct Connect business is now Australia's "largest utilities connection provider" with "relationships with more than half of all the real estate agents in Australia".

The review would reflect "the need to consider market changes over the decade, and the probable next phase of market development" with South Australia, New South Wales and Queensland following Victoria into retail price deregulation.

Craig Investment Partners analyst Mark Lister said when it came to Lumo, Infratil had done a good job of growing the company.

"But growth from here is probably more limited than the easy gains they've had.

"So it is probably the right time for them to look at off-loading it to someone who has an existing business and would like to integrate it," Lister said. Fairfax NZ

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