Shares in investment company Infratil Ltd (ASX: IFT) have risen over 11% this month on the back of multiple expansion plans.
Infratil is a New Zealand-based company that you can think of like a publicly traded private equity company. It invests in its portfolio of assets and often sells them, hopefully at a much more attractive price.
Healthcare and renewable energy assets make up a large portion of its portfolio. It has assets in hydropower stations, wind farms, solar and diagnostic imaging services, just to name a few.
Infratil’s recent acquisition
Earlier this week, Infratil told the market it plans to acquire a majority stake in Auckland Radiology – another diagnostic imaging service with 32 radiologists and 15 clinics around the greater Auckland region.
As part of the transaction, Infratil will hold at least a 50.1% stake in the combined platform and will contribute between $30 million and $60 million.
Pacific Radiology will also hold a stake in the three-way partnership – another New Zealand-based diagnostic imaging service that Infratil purchased a controlling stake in for $350 million earlier this year.
On the recent acquisition, Infratil CEO Jason Boyes said that “Inorganic growth was a key pillar of the investment thesis for Infratil’s acquisition of Pacific Radiology, and we are pleased to see that thesis demonstrated early on in our ownership journey with the addition of an outstanding practice like Auckland Radiology.
Pre-synergies, the acquisition is return accretive to the Pacific Radiology investment case.”
My take on Infratil
This acquisition demonstrates the clear direction Infratil is heading by building out its investments in the healthcare space.
It now means Infratil has three diagnostic imaging services in its arsenal, with the third being Qscan – a service with over 300 machines predominantly across the eastern seaboard of Australia. I like these assets for two primary reasons. The first is that imaging services are often paid for by the public health system, resulting in reliable cash flows back to Infratil.
But the second is that there’s been a shift towards early diagnosis and preventative care, which bodes well for companies like Infratil that are involved with diagnostic imaging.
I’m also interested in Infratil’s stake in CDC data centers given the structural tailwinds that are likely to benefit this industry in years to come.
For some more share ideas, click here to read: 2 ASX small cap shares I’d buy in October.
