Cityspring Infrastructure Trust

[weijian]

This arrangement is very clearly a takeover of CIT by KIT, with the combined entity to be named KIT, while KI/KIFM will be sponsor/trustee-manager.

Nonetheless, the story is (1) CIT to accquire KIT by issuing XXX new units, (2) Combined entity will change name to KIT --> I just wonder, is there any reason for the difference in how the story is told vs how things actually are (takeover of CIT) ?

Lower yield fund acquiring a higher yield fund sounds more normal since it is an accretive acquisition.
KIT shareholders will be fuming if KIT is acquiring CIT and results in a drop in yield.

Although in actual fact, KIT is in the driver seat.

The current price is 54cts and CIT shareholders will get one-off distribution of 0.0303 cts in all. So, currently, the investors are paying 51cts for 3.67cts dividend. The yield is 7.2%. Not too bad for an infra fund.

On paper, it is a one-off accretive and related party transaction.

Going forward, it will be important to see if it can continue to do so and if there are sufficient pipeline from sponsors. Sponsors may include Sembcorp Ind since SCI is more active with infrastructure as its core.

Having said all that, on a global basis most of the lucrative non-toll road infrastructure projects have gone the Private Equity route ever since Macquarie Bank has delisted its highly reputed infrastructure vehicles post GFC.

CS appears to be a vehicle of yester-bubble when infrastructure trusts were the fad at the peak of last bullrun.

GG

hi yeokiwi,
It makes sense, thanks...Good to continue to observe along the sidelines and learn all these tricks that the Big Boys are playing on us poor retail meat..

hi GG,
MIIF is also winding up and it seems like CIT is following the cue. That said, infrastructure assets are still excellent assets to hold for the long term, especially for those that exists in highly regulated (and enforced) regimes and provided that they are relatively politically insensitive.