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Investing in infrastructure to fuel growth

October 2019

When Napier Port listed on the New Zealand Stock Exchange in August, it was just the third company in two years to do so, joining Port of Tauranga, South Port and North Port in its sector.

As well as being a much needed addition to local capital markets, the listing was met with excitement as it provided investors the opportunity to access a strategically important asset. 

ANZ Investments Head of Australasian Equities Craig Brown said the listing is a “fantastic addition” to the New Zealand share market.

“We’re really excited by it as it allows our clients with shares in their investment portfolios to invest in a fantastic asset that has exposure to the growth being generated out of the beautiful Hawke’s Bay region,” Mr Brown said.

Napier Port joins one of several infrastructure stocks held across ANZ’s various equity portfolios, with others including Auckland International Airport, Port of Tauranga and diversified infrastructure investor, Infratil.

The initial public offer (IPO) raised $234 million and Napier Port Chief Executive Todd Dawson said it will be used to develop the Port to support the wider economy.

“It’s a huge milestone for our port to be able to list and be able to support Hawke’s Bay’s growth through continuing the investment in the port,” Mr Dawson said.

Napier Port contributes to over 27,000 jobs across the region and is a vital facilitator of trade to Hawke’s Bay’s $8.1 billion economy.  

“The port is an integral part of the Hawke’s Bay economy and with the growth of the regional economy; the port also needs to develop. That includes a new wharf, built primarily to ease congestion at the port and put us in a better position to respond to future growth."

ANZ has recently added global listed infrastructure to diversified funds, giving investors access to infrastructure companies globally such as Zurich and Frankfurt Airports, toll roads via Transurban and gas pipelines through Enbridge.

The infrastructure asset class can be described as half way between property and equities. Infrastructure assets can be a useful part of a diversified portfolio as they reduce the risk of one particular company or sector impacting the overall return. Listed infrastructure also tends to exhibit more defensive qualities in falling markets relative to international equities.

“Because infrastructure tends to comprise strategically important assets, these businesses often have really good and strong relationships with the customers or the people using the assets,” Mr Brown said.

“They therefore tend to be quite defensive in their income or earning stream and as a result may deliver quite stable profits for shareholders.”

Infrastructure assets are also exposed to the growth of a region. This can provide a strong tailwind for future profits of the company, for instance it may facilitate higher volumes of cargo being produced or the increasing numbers of visitors attracted to the region.  

ANZ is one of just a few New Zealand fund managers offering an infrastructure allocation in diversified portfolios.

 

Learn more about Napier Port’s recent listing and the importance of infrastructure in portfolios here.

This article has been prepared by ANZ New Zealand Investments Limited for information purposes only and it should not be treated as financial advice. It is recommended that you seek advice from an authorised financial adviser which takes into account your individual circumstances before you acquire a financial product. Past performance does not indicate future performance. Performance is not guaranteed and may be negative as well as positive.