Brookfield Infrastructure Chief Executive Sam Pollock (R) smiles as he speaks with Asciano Ltd Chief Executive Officer (CEO) John Mullen during a media conference in Sydney, Australia, August 18, 2015.DAVID GRAY/Reuters
Brookfield Infrastructure Partners LP says its megadeal for Australian port– and rail-systems company Asciano Ltd. offers new access to global shipping customers, but executives say that's only one step on the path to competing with large international rivals.
Executives of the Hamilton, Bermuda-headquartered global infrastructure investor said Tuesday that the acquisition of Melbourne-based Asciano would bring aboard some new shipping companies, as well as building on its existing relationships.
Still, combining operations isn't the most important part of the strategy behind the tie-up worth $8.6-billion, plus debt, according to Brookfield Infrastructure's chief executive Sam Pollock.
Mr. Pollock said the bigger opportunity for Brookfield Infrastructure, managed through Toronto-based Brookfield Asset Management Inc., would come from a "broader and bigger platform" and "having more of these relationships and being able then to drive them into our various terminals."
He envisions extending Brookfield's shipping container terminal presence beyond Australia, North America and Europe. That would help it compete with companies such as Hutchison Port Holdings Ltd., a developer and operator with 52 ports in 26 countries in Asia, the Middle East, Africa, Europe, the Americas and Australasia.
And that's going to take more acquisitions.
"Obviously we won't get there just with this portfolio and our portfolio," Mr. Pollock said. "We need to continue to add to it, but it's a great stepping stone."
Asciano has struggled with the need to build up a broader global business to meet the needs of its increasingly international customers. The company said the ship has sailed on the chance to acquire large ports, given the high valuations of these assets. Many institutional investors have been looking for such infrastructure opportunities to buy. Asciano has instead sought to improve its services and reduce costs to compete.
Asciano management told investors in a conference call Monday night that it "scoured the world" for nearly two years for opportunities to grow the domestic Australian company beyond its current geographic reach. That came after making dramatic improvements to cranes, rail depots and other structures and systems.
"Our ports business in particular is up against global competitors with global customers etcetera," Asciano chief executive John Mullen said on the call. "We really needed to find that strategic solution. It eluded us until now, despite some near misses with quite a number of opportunities in Asia, North America and elsewhere."
Now Asciano is looking to Brookfield for that global link.
At the same time, Brookfield says it will seek to become better known by the Australian marketplace, where its brand isn't as strong with analysts and investors. Brookfield Infrastructure plans to list its units on the Australian Stock Exchange.
Brookfield will have a 55-per-cent stake in Asciano. Another 23 per cent will be held by Brookfield Asset Managment-sponsored and managed funds. There are also two institutional partners taking 11-per-cent-stakes each and contributing a combined $1.13-billion to fund the deal. One is British Columbia Investment Management Corp., the Victoria, B.C.-based pension plan. The other is the government of Singapore.