Brookfield Infrastructure retooling its portfolio

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Brookfield Infrastructure is looking to shuffle a portion of its portfolio by adding in areas like toll roads and utilities, and by divesting assets tied to timber and other non-core groups.

In South America, the company hopes to acquire a 60 per cent stake in toll road operators Obrascon Huarte Lain Brasil S.A. for about $1.7-billion, including debt, by teaming up with Spain's Abertis. On Monday Brookfield and its partners announced the acquisition of the remaining 45 per cent of the AVN toll road in Chile, which circles Santiago, for a total purchase price of $590-million including debt.

Brookfield is writing a cheque for $165-million for this deal, giving it a 51 per cent ownership stake in a toll road that has seen traffic jump at a compound rate of 8 per cent annually for the past three years.

Brookfield is also acquiring 85 per cent of Inexus, which owns and operates gas and electricity connections in the U.K. for $15-million, plus a contingent payment of $40-million if certain milestones are achieved. Once the deal goes through, Brookfield will invest $450-million to reduce the company's debt to investment grade levels.

Don't be surprised if you see more European deals like this one in the near future. At Brookfield's annual general meeting this year, chief executive officer Bruce Flatt said there are opportunities to pick up additional infrastructure assets from European companies who are choosing to focus on their home markets.

But while Brookfield keeps adding, it also announced that it is looking to sell off some "timber and certain non-core assets" to "reinvest capital in assets that offer superior returns." Few details were provided, but obviously Brookfield thinks it can make more money elsewhere.

To help fund the $630-million that Brookfield will invest in its two new assets, the company announced a $445-million equity offering Tuesday, co-led by Credit Suisse, RBC Dominion Securities, Citigroup and HSBC. $322-million of the deal will be offered to the public, and the remaining portion will be purchased by the parent Brookfield to maintain its roughly 30 per cent interest in Brookfield Infrastructure.