New Zealand’s biggest fuels importer is hunting for acquisitions in the jet fuel and diesel sectors in Australia after listing its shares on the ASX in response to appetite from investors looking for more options in locally listed energy infrastructure.
Channel Infrastructure in November made its first acquisition outside its home market, buying a 25 per cent stake in an ExxonMobil-run jet fuel pipeline serving Melbourne airport from infrastructure investor CVC DIF.
It will now seek more opportunities in that part of the aviation fuel market and in adjacent areas such as diesel and petrol importing and storage, said chief executive Rob Buchanan.
Channel’s expertise as an operator in terminal services and infrastructure meant it could bring more than just capital to the table when pursuing merger and acquisition targets in Australia.
“That differentiates ourselves from the passive investors,” said Buchanan, who has led the company since early 2023.
“As a result of the work we’ve done in New Zealand, we’ve got very good relationships with our oil company and customer counterparts, and those relationships, I think, are key to unlocking some of the further growth opportunities that we might see in Australia.”
Channel, the former New Zealand Refining Co, owns New Zealand’s largest fuel import terminal, at Marsden Point north of Auckland, which converted into an import business when the refinery at the site closed in 2022.
About 80 per cent of the country’s jet fuel and 40 per cent of its land transport fuels pass through the site, which is underpinned by long-term contracts with three major customers: ExxonMobil, BP and Ampol’s Z Energy business.
Channel announced at its interim results in August that it was broadening its M&A mandate beyond New Zealand to Australia, and Buchanan said the ASX listing effort ran in parallel to that.
“We’ve seen strong interest from Australian fund managers as the listed infrastructure market has got smaller and smaller, and that’s one part of driving towards an ASX listing,” he said.
“The other part is that we see more and more opportunity in our space in Australia to grow.”
The $NZ1.13 billion ($990 million) company is also expanding fuels storage at Marsden Point, building a bitumen import terminal and examining a biofuels plant in partnership with Qantas, ANZ Bank and others. It has also examined a sustainable aviation fuel project alongside mining giant Fortescue.
Early design work has also been completed on a peaking power station near to Marsden Point, while a move into LNG import infrastructure – which New Zealand is considering to relieve a local gas shortage – is also possible but only with a partner, said Buchanan. He describes Channel’s approach to decarbonisation as “fuel-agnostic”, and says the firm is cautious about allocating too much capital into any single decarbonisation pathway.
“If you think about who Channel is, we help provide fuel security in New Zealand, and we’re looking to do that in Australia through ownership of that infrastructure … providing a kind of capacity-based firming opportunity for the electricity market is aligned to that objective,” the former M&A banker at Forsyth Barr said.
Australia’s listed energy infrastructure sector has shrunk dramatically over the past several years as pipeline and power line owners such as DUET Group, AusNet Services and Spark Infrastructure have been snapped up by private owners in multibillion-dollar deals.
Buchanan said the stock was attractive to investors as a hedge against exposure to inflation and for its stable cash flows, which are about half backed by fixed revenues and the other half by fuel throughput volumes.
There’s potential for the share of Australian investors on Channel’s register to rise beyond the current 20 per cent to 25 per cent, Buchanan said, given that its ASX listing could unlock interest from funds which require that as a condition of investment.
In addition, having listings in both Australia and New Zealand should help to fund the acquisitions that Channel expects to make over time as well as its organic growth projects, Buchanan said, emphasising that Channel would be patient and ensure acquisitions deliver value for shareholders.
“The company’s got quite a significant array of growth opportunities … and we will need to fund that over time.”
Extracted in full from: https://www.afr.com/companies/energy/kiwi-interloper-prowls-for-jet-fuel-diesel-acquisitions-in-australia-20251222-p5npf6
