TWO foreign pension funds with investments overseen by Sydney fund manager CP2 have taken advantage of the high Australian dollar to sell a combined stake of almost 8 per cent in Australia's largest listed toll-road operator, Transurban, for $631 million.
The block trade at $5.51 apiece - a 3.2 per cent discount to Transurban's closing price on Monday - will reduce the stake managed by CP2 in the toll-road owner from 12.57 per cent to 4.73 per cent. CP2 would not reveal the identity of the two sellers, apart from saying they were foreign pension funds.
It comes two years after Transurban rejected a $7.2 billion takeover bid from a consortium of CP2 and two Canadian pension funds. Ontario Teachers' and the Canada Pension Plan have since sold their cornerstone stakes in Transurban, which owns the Lane Cove Tunnel and Melbourne's CityLink.
The sale highlights the shift in investor focus towards unlisted infrastructure vehicles and raises the prospect of Transurban following toll road owners Intoll and ConnectEast down the road to privatisation.
UBS was the underwriter of the block trade of 114.6 million shares held by CP2, which were offloaded to a slew of investors believed to be dominated by pension and sovereign wealth funds.
Andrew Chambers, an analyst at Legg Mason, said the sell down by the two foreign investors made sense because they should benefit handsomely from repatriating Australian dollars earned from the sale into either euros or US dollars.
"It is hard to know the exact rationale but from a currency perspective it is good timing," he said.
Mr Chambers said infrastructure stocks such as Transurban had appeal to investors such as the Future Fund because of their defensive earnings and inflation protection. Transurban has the ability to raise tolls on motorways when inflation spikes.
The Future Fund declined to comment yesterday on whether it had bought into Transurban.
CP2's managing director, Syd Bone, said the two clients that had sold their stakes wanted to rebalance their portfolios.
The sale leaves two of CP2's foreign clients with 4.73 per cent of Transurban's register between them. Transurban shares fell 15? to $5.54 yesterday.