Infratil (ASX:IFT): One of the ASX’s largest infrastructure investors

Visit the website of Infratil (ASX:IFT), and the first thing you see is ‘We invest in ideas that matter’. This company is an investor in infrastructure and is one of the largest on the ASX – over 30 years old and headquartered in New Zealand, listed on both exchanges.

It has a diverse portfolio, but it is concentrated in digital investments which promise big returns, but they do not come cheap.

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Overview of Infratil

Infratil is a company over 30 years old and has always been an infrastructure investor. Since 1998, it has owned 66% of Wellington Airport, buying it from the Crown. These days, 66% of the company’s investments (totalling $19bn) are in digital infrastructure (most particularly its stake in CDC Data Centres and in One NZ as well as other data centre companies including Gurin, Galileo and Kao Data which have exposure to Asia and Europe) and 21% in renewables with the balance in healthcare and its Wellington Airport stake.

Over the ten years to early 2025 the company’s assets increased roughly 7-fold, with digital infrastructure growing to around two-thirds of total value and geographic diversification expanding significantly beyond Australasia. It boasts an 18% TSR (Total Shareholder Return) since its inception in 1994 and targets 11-15% per annum returns on a rolling 10 year basis.

Positive on EBITDAF, but a negative bottom line

As an investment company, its financials are complicated. It makes money in various ways including revenue from telcos plans in One NZ and from data usage in CDC.

This company doesn’t use EBITDA, it uses EBITDAF (Earnings Before Interest Tax Depreciation Amortisation and Fair value adjustments). In the most recent fiscal year (FY25), this metric was up 8-9% and came in at NZ$986.4m – of this, $604m came from One NZ with a further $173.9m from CDC.

But it made a net loss of NZ$261.3m, down from a $761.3m net loss the year prior, on the basis of over $600m in depreciation and a further $180.3m in realisations and revaluation. Interest, tax and international portfolio incentive fees contributed too.

The company has guided to $960-1bn ‘proportionate operational EBITDAF’ adjusting for certain divestments. It guided to $2.2-2.6bn proportional capex. It has just over $1bn in liquidity, most particularly in undrawn bank facilities.

What does the outlook look like?

The broader outlook for the company must be seen in light of both global thematic drivers and local macroeconomic conditions. Infratil’s strategy deliberately anchors on long-term structural trends such as digital connectivity and renewable energy demand, which are expected to remain robust globally regardless of short-term economic cycles.

The valuation growth in CDC, for example, underscores how asset quality and secular demand can drive significant value creation over time, even if short-term market conditions are volatile.

Within New Zealand’s economy the immediate operating environment is more challenging, with subdued domestic demand and investment activity. That said, Infratil’s earnings are substantially derived from international assets and sectors less tightly correlated with local GDP growth, meaning its performance is somewhat insulated from a domestic recession relative to purely local companies. Just consider that its competitor (Spark) has been enduring difficult times as a consequence.

Dividend income and operating cash flow from companies like One NZ and Wellington Airport provide diversified revenue streams, though performance in those areas can still reflect broader demand conditions.

Analysts mean target price is A$11.94 which would imply 26% growth. But its P/E is 39.6x and its P/B is 1.5x – both indicating the company could be overvalued. And while in the longer-term growth is expected, consensus calls for a slight retreat in revenue from NZ$3.35bn to $3.29bn and earnings too, to $913.4m. The year after $3.43bn revenue and NZ$1.16bn.

Conclusion

Infratil is doing better than most investment companies right now – just ask GQG. There is significant long-term potential for growth where Infratil is invested in, but it may be slower and most costly than investors would have anticipated.