BBGI Global Infrastructure offered £1bn takeover deal
BBGI Global Infrastructure has been offered a £1bn takeover from a Canadian pension giant, with the FTSE 250 trust’s board backing the deal.
In a stock exchange notice, BBGI said $250bn asset manager British Columbia Investment Management had offered 147.5p a share for the entire trust, 21 per cent above the trust’s share price yesterday.
The offer also values BBGI at a 3.4 per cent premium to its underlying assets, as the trust had been trading on a significant discount to its assets in recent months.
While the deal has been backed unanimously by the board and praised by analysts, many cautioned that the takeover was a natural consequence of the wide discounts among investment trusts.
“I have been warning for ages that if investors didn’t recognise the value in the infrastructure and renewables sectors, then a corporate investor or a big institutional investor would,” said James Carthew, head of investment company research at Quoteddata.
“We view this transaction as reflecting the value on offer at a number of Infrastructure funds given the sustained wide discounts,” added Winterflood analyst James Wallace.
BBGI’s sector, social infrastructure, is currently trading on a 25 per cent average discount, leaving many private buyers eager to take advantage of a cheaper takeover price.
Social infrastructure isn’t alone in this – renewable trusts trade at an average 30 per cent discount, while core infrastructure trusts also trade at a 25 per cent discount.
However, Wallace noted that this was the first takeover bid for an entire portfolio at a premium to its underlying assets for the sector in the last couple of years.
Other comparable trusts in the sector include HICL Infrastructure Company and International Public Partnership, which have seen their share prices jump 5.7 per cent and 6.6 per cent respectively following the news.