Utilities Sector

• Infratil Ltd (IFT NZ) aims to raise around US$456m (NZ$750m) via an institutional placement.
• Proceeds from the placement will be used to acquire the remaining stake on One New Zealand from Brookfields.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• Infratil Ltd (IFT NZ) is acquiring Brookfield Asset Management Lt (BAM US)‘s 49.95% stake in One NZ for NZ$1.8bn. This will be partly funded through a NZ$850m placement.
• There will be a NZ$750m underwritten placement at NZ$9.2/share (an 8.9% discount to the last close) and a retail offering of NZ$100m.
• There will be passive buying from index trackers post the completion of the placement and the settlement of the shares and that will remove some of the overhang.

• Late March, SOE-backed power play China Resources Power Holdings Co Ltd. (836 HK) announced it intends to spin off its energy unit via an A-share listing. 
• Shares gained 4.9% on the news – gains which were promptly given back over the ensuing fortnight.
• Renewable energy profits have been the driving force behind CRP’s bottom line strength the last two years. But how best to assign a value to the remaining loss-making thermal ops? 

• El Nino effects start to sink in? During last week grain prices saw building up some momentum.
• The DSCI drought index also surged after many weeks of continuous declines.
• Nevertheless, we should actually see lots of rain during the summer in the US if we’ll see a classic El Nino.

• There continues to be little traction above $93 on the MSCI ACWI (ACWI-US), which remains the top-end of our anticipated 2023 trading range.
• At the same time, we cannot get too bearish until there is a break below $90.50 short-term support.
• EURO STOXX 50 pulling back to 4100-4200 buy area. TOPIX holding above 2120 support. Buy ideas within Technology, Construction Materials, gold miners, Utilities, other defensives.

• S&P has raised Naturgy Energy Group SA (NTGY SM)‘s credit outlook from negative to stable considering that the company may not finally carry out the Gemini spin-off project.
• Naturgy’s shares do not trade on fundamentals, rather on expectations that IFM tries to increase its stake (free float is just 15%). There’s some potential overhang risk though.
• IFM has not acquired any significant stake since April, but I would not short the shares as IFM could resume share purchases on an opportunistic basis.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Azure Power Global Ltd

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess China Water Affairs’ ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Adequate”.

• The New Mexico Supreme Court denied a joint motion filed by PNM Resources (PNM US), Avangrid Inc (AGR US) and the New Mexico Public Regulation Commission last February.
• The New Mexico Court assess the operation in an oral hearing convened next September. The delay of the decision implies higher uncertainty about the closing of this deal.
• I continue to believe that Iberdrola/Avangrid’s acquisition will be completed. PNM shares look fairly valued on an EV/Fwd EBITDA basis, therefore I see it as a reasonably balanced risk-reward proposition. Long.

• Late Wednesday, the boards of Adani Enterprises, Adani Green Energy, and Adani Transmission announced they would meet Saturday to consider fund-raising proposals.
• They will consider issuance of equity shares or other eligible securities through a private placement, a qualified institutions placement, or a preferential issue, among other methods.
• Earnings just out were generally good/up. They still need/want to raise equity. SEBI is still conducting its investigation but hints are there’s trouble. A set of private placements looks likelier.

• Black Rock Mining Ltd (ASX:BKT) is developing the Mahenge natural graphite project in Tanzania, eastern Africa and is well advanced in defining and planning a low capex, high margin, high return operation.
• The company holds an 84% interest in Mahenge with the Tanzanian government retaining a free-carried 16% stake.
• Mahenge is one of the largest JORC-compliant flake graphite resources globally and is well positioned to benefit from growing global demand for natural graphite from use in Li-ion batteries.