Brookfield-family companies are hot commodities in new-issue markets.
After launching a bought deal late on Tuesday, Brookfield Infrastructure announced on Wednesday that its offering has been upsized to a total of $588-million. About 70 per cent of that comes from public investors, and the remainder comes from parent company Brookfield Asset Management Inc., which bought more shares to keep its 30 per interest in the subsidiary.
In part, the demand stemmed from a lack of new stock coming out of the infrastructure arm. The company's last round of financing came almost two years ago in November, 2009, when it raised a similar amount. Since then, the stock has climbed by about two-thirds and is up about 20 per cent year to date, while the S&P 500 and the S&P/TSX are both down for the year.
The quality of the Brookfield name is also a factor. This time last year, a slew of related companies, such as Brookfield Properties and Brookfield Renewable Power Fund, sought to raise money. These deals were scooped up. And earlier this year, the parent company raised common equity in a big deal worth $568-million. (However, those shares have taken a hit since.)
Last quarter, Brookfield Infrastructure announced solid quarterly earnings and a 13 per cent distribution increase, as well as a new focus for its Australian railroad. Rather than continue to focus on transporting grain, WestNet Rail is shifting its focus to iron ore.
Tim Kiladze