Brookfield Infrastructure, Institutional Partners Just Dropped Many Billions on New Assets   

Brookfield Infrastructure, Institutional Partners Just Dropped Many Billions on New Assets   

It’s been a busy week for Brookfield Infrastructure (CA:BIPC, US:BIPC) as it’s acquired two infrastructure-related businesses for $8.5 billion, easily its busiest couple of days so far in 2023. 

First, on April 11, AXA IM Alts announced it was selling Data4, an owner and operator of European data centers, to Brookfield for an estimated $3.8 billion. 

A day later, Brookfield issued a press release that it and its institutional partners would acquire Triton International (US:TRTN) — the world’s largest intermodal container leasing company — for $13.3 billion in cash and stock.  

Paying Premium

The offer for the NYSE-listed company is $85 a share, a 35% premium to its April 11 closing price. Triton shareholders will receive $68.50 in cash per share and $16.50 in BIPC stock. 

The stock portion of the purchase will include a collar that ensures Triton shareholders receive precisely $16.50 a share. Shareholders can accept the mixed cash-and-stock consideration, all cash or all stock. Approximately 18.4 million to 21.3 million BIPC shares will be issued, the final number depending which of the three options Triton shareholders select. 

Brookfield is investing $1 billion of the $4.7 billion in Triton equity. However, the infrastructure investor’s equity commitment to the Data4 acquisition has not been revealed. 

Cash Yield

“Triton is an attractive business with highly contracted and stable cash flows, strong margins and a track record of value creation,” Sam Pollock, Brookfield Infrastructure’s CEO, said in its press release. “This transaction provides Brookfield Infrastructure with a high going-in cash yield, strong downside protection, and a platform for growth in the transportation and logistics sector.”

Triton shareholders receive a premium on their investment — Triton stock has provided a 700% total return since it merged with TAL International in 2016 — while also getting a diversified portfolio of global infrastructure assets. 

Its position in the supply chain and logistics industry gives Brookfield a platform for growth in these two critical pieces of global business.

Triton leases containers from 205 locations in 55 countries worldwide. It sells containers from 357 locations in 91 countries. 

In 2022, it had $1.68 billion in revenue, 9.5% higher than in 2021, with an adjusted net income of $702.8 million, 14.4% higher than a year ago. In addition, its gross margin and leasing margin were a healthy 51.2% and 40.95, respectively, in 2022. 

Europe Foothold

As for Data4, it operates 30 data centers in France, Italy, Spain and Luxembourg. It is also developing a data center facility in Germany with the potential for 2.1 million square feet and 180 megawatts of energy capacity.  

AXA IM acquired 37% of Data 4 in 2012. It bought the remaining 63% of the company in 2018 for an undisclosed sum. 

While Brookfield owns data centers in India, Latin America, Australia and New Zealand, this is its first foray into Europe.  

Over the past two years, Brookfield deployed more than $5 billion into new assets. As a result, these latest two acquisitions significantly add to its capital recycling. 

In October 2022, Brookfield Asset Management (CA:BAM, US:BAM) held its initial close for its fifth infrastructure fund. Between Brookfield Asset Management, Brookfield Infrastructure, and Brookfield Renewable Partners L.P. (CA:BEP, US:BEP), Brookfield Infrastructure Fund V will likely raise $40 billion to be deployed in infrastructure assets over the next few years.

Attracting Institutions

BIPC stock lost ground on the news of the Triton deal. Investors are worried it’s bitten off more than it can chew with the $13.3 billion acquisition of the cyclical business. It’ll be interesting how institutional owners react, after they loaded up last summer and into early this year.

Brookfield believes that Triton provides it with healthy cash flows and margins. Always the long-term investor, its patience should deliver excellent returns for shareholders over the long haul.  


This story originally appeared on Fintel.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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