“Future Fund” Bids for Aust Infrastructure Fund

AIX Out Performs

In difficult times for investors, the Australian Infrastructure Fund has out performed thanks largely to a takeover bid from the Future Fund. Its airport assets are seen as providing a stable income stream. Infrastructure sector stocks provide stable investment opportunities for retirees.

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Friday 31 August 2012Proposed takeover offer for AIXAustralian Infrastructure Fund (AIX) announced on Friday 24thof August that it has received a proposed takeover offer from the Future Fund Board of Guardians (Future Fund) to acquire all of its assets for cash.  This includes AIX’s interests in Perth Airport, Australian Pacific Airports Corporation (Melbourne Airport), Queensland Airports, HTAC, NT Airports and Statewide Roads.The indicative offer price equates to approximately $3.22 per stapled security which, together with the residual cash held by AIX after allowing for any taxes, payments to the Hastings Group for management and performance fees, transaction related costs and residual liabilities of AIX, is intended to be distributed to shareholders.

As at 30 August 2012, the stock price closed at $3.08 per share which represents approximately a 4 percent discount to the potential offer price.

Existing shareholders can:

Take no action.

There is still approximately 4 percent upside to the takeover price of $3.22 plus any potential cash distribution. The key risk to continuing to hold is that the acquisition does not proceed and as a result the price decreases.

The JBWere Investment Strategy Group (ISG) believes that AIX continues to offer shareholders a defensive yield profile in an uncertain investment environment with the potential for further share price appreciation and additional distributions should the takeover proceed.

Sell your holding on market.

Selling would allow current holders to realise any gain made and switch into alternative investments immediately. A sale at this point would forgo any further upside in share price to $3.22 as well as incur transaction costs. Selling will also eliminate any potential upside from the entry of a competitive bid from another party and any further cash distributions made by AIX.

Shareholders should consider their own personal circumstances when making any decision regarding their holding in AIX.

Australian Infrastructure Fund (AIX) – Neutral Recommendation from Goldman Sachs

Goldman Sachs (GS) currently has a neutral recommendation on the Australian Infrastructure Fund. In Goldman Sachs‘ view, the offer price of A$3.22/security highlights the appeal of infrastructure assets to superannuation/pensions funds and their willingness to assign greater value to this class of investment than other investors (Particularly those with mandate which restrict them to listed securities). Following the takeover offer announcement from the Future Fund, AIX has experienced a significant rerating. While there is still the risk that the proposal will not proceed the stock has shown substantial outperformance over the last 12 months.



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Important Notice:

This document contains general advice only. In preparing this document, JBWere Pty Ltd (“JBWere”) did not take into account the investment objectives, financial situation and particular needs (“financial circumstances”) of any particular person. Accordingly, before acting on the information contained in this email, you should assess whether the advice is appropriate in light of your financial circumstances or contact your adviser.

Markets can change quickly and as a result some of the views outlined in this publication may not hold if conditions shift rapidly.  Anyone who takes positions in stocks must remain keenly aware of the risks in trading in the market and keep constant contact with their adviser in case of rapid market movements.

Past performance is not a reliable indicator of future performance.

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Certain excerpts contained in this document are sourced from research reports produced by the Global Investment Research Division of Goldman Sachs Australia Pty Ltd, Goldman Sachs New Zealand Limited and/or The Goldman Sachs Group, Inc.  This document has been prepared by its authors independently of Goldman Sachs Australia Pty Ltd, Goldman Sachs New Zealand Limited and/or The Goldman Sachs, Inc and their respective related bodies corporate and affiliates (collectively, the “Goldman Sachs Group”).  No member of the Goldman Sachs Group has reviewed or endorses the accuracy or completeness of the information contained in this document and the Goldman Sachs Group (and each member of the Group) takes no responsibility for its contents.  JBWere Pty Ltd has no authority whatsoever to give any information or make any representation or warranty on behalf of the Goldman Sachs Group or any director, officer, partner or employee of the Goldman Sachs Group or any other person in connection therewith. In particular, other than as indicated in the document, the opinions, estimates, and projections expressed in the report are entirely those of the author(s) hereof and are not given as an agent of the Group (or any member of the Group) or any other person in connection therewith.  Accordingly, the Goldman Sachs Group to the extent permitted by law disclaims all liability and responsibility (including in negligence) for any direct, indirect or consequential loss or damage which may be sufferer or incurred by any recipient through relying on anything contained in or omitted from this document.  You should also refer to the disclosures concerning Goldman Sachs Australia Pty Ltd at http://www.gs.com.au/Disclosures.

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