Infratil has agreed to acquire an additional 4.92% stake in Contact Energy for $437.7 million, or $8.95 per share.

The infrastructure investor bought the shareholding from TECT Holdings (formerly Tauranga Energy Consumer Trust).

The purchase would be funded by borrowings of $218.8m and the issuance of $218.8m of new Infratil shares to TECT at Friday’s closing price of $12.43 per share.

TECT is the investment arm of Tauranga and Western Bay of Plenty’s TECT Community Trust.

Infratil’s shareholding in Contact would rise to 14.3%, up from 9.4% it acquired following the recent merger of Contact and Manawa Energy.

Infratil chief executive Jason Boyes said the transaction was a win-win for both parties.

“TECT’s decision to diversify created a natural opportunity for us to increase our investment in Contact,” he said. “Part-funding with new shares efficiently preserves our flexibility for future growth, while increasing ownership of a strong cashflow-generating business.”

Boyes said Infratil had a deep understanding of the energy sector through its former ownership of Manawa Energy.

“We look forward to supporting Contact’s leadership as they drive the combined business forward, and we appreciate TECT’s decision to remain invested in us through Infratil shares,” he said.

For TECT, the transaction is the continuation of a 30-year relationship with Infratil via their holding in what was then Trustpower, and Manawa Energy.

TECT’s chief executive, Wayne Werder, said they knew Infratil and their track record well.

“We’re delighted to continue this relationship by becoming an Infratil shareholder and will benefit from diversification through their broader infrastructure portfolio.”

-RNZ