TSI holds an asset portfolio mainly comprised of power-generating assets, diversified by asset type, geography, operational mix and fuel source.
Revenue is underpinned by long-term contracted revenue, with a weighted average remaining contract life of 12 years. TSI will struggle to grow revenue in the medium term due to contracted revenue step-downs.
Growth options are likely to come from growing the renewable portfolio, but funding will be an issue.
TSI is subject to an agreed takeover proposal at $0.85 per security. TSI independent directors have decided to proceed with the takeover proposal from Thai power producer Ratchaburi Electricity Generating and have entered into an implementation agreement.
The offer remains subject to security holder approval with scheme meetings expected to be held in late June. If approved, the scheme consideration is expected to be paid in early to mid July.
The offer price represents a 39% premium to the six month average price up to the announcement of the takeover.
I expect the offer to succeed but given it’s another two months before security holders receive payment, most investors would be better off selling now and redeploying the proceeds into other investment opportunities.
For more information on Transfield Services Infrastructure Fund (TSI) please contact us on 07 4771 4577.