The Queensland government has cut its stake in Aurizon to less than 5 per cent after selling $350 million worth of shares in the rail group to reduce its debt.
The government has now sold nearly all its holdings in Aurizon, formerly known as QR National, making a profit of about $2.7 billion. It had initially retained a 34 per cent stake following the company's float three years ago. Queensland Treasurer Tim Nicholls said the government had taken advantage of "favourable market conditions" to reduce its holdings.
Aurizon's shares, which had a float price of $2.55, are up about 27 per cent this year and closed at $4.75 on Tuesday.
Moelis & Co analyst Simon Fitzgerald said the strength of continuing demand for the stock was reflected by the premium paid by investors to buy the shares in the government sell-down on Monday.
The government sold 74.3 million shares at $4.71 each. UBS was appointed to conduct the trade.
The price paid was a 4¢ premium to Aurizon's closing price of $4.67 on Monday.
Aurizon, which has bought back shares in previous government sell-downs, did not participate in Monday's offer.
The Queensland government sold $1.5 billion worth of shares - a little more than half its 34 per cent stake - at $3.47 per share in October last year. Of this, shares worth $1 billion went to Aurizon.
It subsequently sold another $806 million of shares at $4.03 in March, shortly after Aurizon announced a joint venture with India's GVK Hancock Coal to build a $6 billion port and rail project in the Galilee Basin.
But the falling price of thermal coal, which is mined in the Galilee, led the venture to scale back plans for new rail infrastructure, and analysts say it could be several years before the project begins.
They have not yet factored any potential earnings from the joint venture into their stock estimates. Some believe Aurizon's shares are now close to full value.
The government did not disclose which funds bought its shares.