Latest / Best of Business / Jason Boyes: Infratil CEO on the company's full-year result

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Jason Boyes: Infratil CEO on the company's full-year result · Best of Business

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  Speaker 2: The AI boom is paying off in a very big
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  Speaker 2: way for one of New Zealand's most prominent infrastructure investors.
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  Speaker 2: Infertil has reported a net profit after tax of five
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  Speaker 2: hundred and seventy four million dollars for the twenty twenty
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  Speaker 2: six financial year and has increased its earnings by eleven percent.
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  Speaker 2: The bulk of this growth has come from its investments
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  Speaker 2: in CDC, which is a data center business, and American
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  Speaker 2: renewable energy business Long Road. Jason Boyce is Infertil's chief
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  Speaker 2: executive Hire Jason Hey Heather, So you guys reckon this.
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  Speaker 2: AI is the investment opportunity of a lifetime, is it?
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  Speaker 3: It definitely is looking that way. The growth is pretty stupendous.
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  Speaker 3: When you look at our growth this year, a lot
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  Speaker 3: of it is from CDC and Long Road fueled by
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  Speaker 3: just that.
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  Speaker 2: Where do you see your investments going, Like, how much
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  Speaker 2: more could you earn off this?
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  Speaker 3: It could be pretty amazing. So if you look at
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  Speaker 3: what CDC announced this year, doubled what it's contracted and
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  Speaker 3: it was already a pretty big business, and we see
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  Speaker 3: it's got the pipeline to do that again over the
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  Speaker 3: next two four years. Long Road's not so different. We
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  Speaker 3: announced a new large project they've acquired today needs some
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  Speaker 3: regulatory approvals, but with that and what they're seeing in
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  Speaker 3: the US, they're looking to double again in the two
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  Speaker 3: years out towards the end of the decade. So that
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  Speaker 3: takes CDC to about two billion of earnings, Long Road
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  Speaker 3: to over a billion US of run rate earnings. Pretty
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  Speaker 3: big businesses.
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  Speaker 2: Have you guys got enough places to actually put you money?
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  Speaker 2: Are there are enough investment opportunities out there for you?
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  Speaker 2: In AI?
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  Speaker 3: I think there's a lot. We're still at the beginning
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  Speaker 3: of it and we're still learning quite a lot. We
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  Speaker 3: quite like you know in Fratil, it's in the name infrastructure,
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  Speaker 3: So beginning with building that infrastructure layer of what's to
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  Speaker 3: come feels like a good place for us to be.
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  Speaker 3: But we're quite focused on where the once we have
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  Speaker 3: strong positions that layer and energy and data centers and
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  Speaker 3: what else can we build other businesses on top of
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  Speaker 3: that that can benefit from the infrastructure layer with that
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  Speaker 3: we own, So there's plenty to learn and look at
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  Speaker 3: over the next we will.
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  Speaker 2: How exposed to you. If you're at the infrastructure level,
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  Speaker 2: are you exposed if there was an AI bubble burst?
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  Speaker 3: We're not as exposed as say an application or a
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  Speaker 3: business that doesn't have long term contracted earnings. So CDC
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  Speaker 3: is contracting its data centers out to highly credit worthy counterparties,
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  Speaker 3: the biggest names and business that you can think of
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  Speaker 3: for ten fifteen years plus with bring your rights out
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  Speaker 3: to often thirty years. So if demand goes away, those
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  Speaker 3: contracts will still need to be paid for and earnings
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  Speaker 3: will still come through to CDC. Its growth will be lower,
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  Speaker 3: but the cash flow out of that business will be enormous.
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  Speaker 3: With long road it's pretty much the same. They contract
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  Speaker 3: all of the off takes of power from their soul
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  Speaker 3: of farms and then batteries for twenty years thirty years
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  Speaker 3: to similar sort of credit worthy counterparties. So again if
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  Speaker 3: the boom men's their earnings aren't going to be hit
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  Speaker 3: at all, their growth will be different, but again very
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  Speaker 3: strong cash flow through back to to Infratil shareholders, which
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  Speaker 3: we can then use to shape the portfolio again for
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  Speaker 3: whatever the world looks like.
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  Speaker 2: Then now I can tell what you guys are trying
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  Speaker 2: to do is to couple your solar energy with your
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  Speaker 2: data centers. But is that ultimately going to be a
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  Speaker 2: handbreak on the growth of the data centers the availability
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  Speaker 2: of power.
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  Speaker 3: Well, solar battery is still the fastest energy to deploy.
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  Speaker 3: It does need to be. We call it firms. So
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  Speaker 3: obviously the sun doesn't shine at night, and that comes
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  Speaker 3: from the grid in the US, which is a mix
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  Speaker 3: of stored renewable energy and renewable energy from fossil fuels.
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  Speaker 3: The major growth you're seeing in the US is being
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  Speaker 3: initially led by fossil fuels, so gas or diesel to
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  Speaker 3: get these buildings up and the machines working. What we
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  Speaker 3: expect to happen is over time it all makes sense
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  Speaker 3: to shift some of that energy to solar and battery
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  Speaker 3: because the gas and the diesel is more expensive to run,
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  Speaker 3: so actually it will enable more growth in the renewable
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  Speaker 3: energy side. But you're quite right in a way, and
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  Speaker 3: that if you want to push the stuff onto the
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  Speaker 3: system in large lumps like they are in the US quickly,
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  Speaker 3: that will is inevitably evolving more gas and diesel generation
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  Speaker 3: in the short term.
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  Speaker 2: Jason, are we doing enough in the data center space
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  Speaker 2: in New Zealand.
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  Speaker 3: I think we could do more. I think what would
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  Speaker 3: be amazing for New Zealand actually any country Australia is
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  Speaker 3: no different, is to try and own and control as
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  Speaker 3: much of your AI infrastructure as you can so that
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  Speaker 3: the things that you really want to stay in New Zealand,
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  Speaker 3: the things that are going to keep New Zealand secure
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  Speaker 3: in a volatile world ahead, are actually in infrastructure that's
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  Speaker 3: in our country. We have all the capability to do
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  Speaker 3: it in great renewable energy resource today. It I think
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  Speaker 3: we could probably move quicker on bringing that compute to
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  Speaker 3: the actual computers to New Zealand are more sovereign if
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  Speaker 3: you like format. But we're working on that. I think
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  Speaker 3: it will happen. But it's a big opportunity, not just
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  Speaker 3: for all the economic growth that that development brings, but
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  Speaker 3: I think securing the future of the country in an
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  Speaker 3: increasingly digital world.
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  Speaker 2: All right, what's the deal with Contact? Why are you
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  Speaker 2: bawling out of it?
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  Speaker 3: Contact will be sold a third of our stake a
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  Speaker 3: couple of weeks ago. We still are the largest shareholder,
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  Speaker 3: I believe, and have a love hold large holding in
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  Speaker 3: that and we haven't said what we're going to do
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  Speaker 3: about it. For us, it was a good time, so
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  Speaker 3: the share price have been strong and we clearly, as
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  Speaker 3: the result shows, have other future places for that money.
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  Speaker 3: For two, we're more a control oriented investor. We like
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  Speaker 3: to control or have co controller businesses so that we
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  Speaker 3: can actively manage them and position them for large growth tailwinds.
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  Speaker 3: A minority stake it doesn't really work for us long term.
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  Speaker 3: So unless there's a way to reach a kind of
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  Speaker 3: co control position in contact, you should see that come
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  Speaker 3: out of us over time and that capital be contributed
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  Speaker 3: to businesses that we control and have more say in
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  Speaker 3: their direction.
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  Speaker 2: Fair enough, Jason Listen, thank you so much for taking
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  Speaker 2: the time to talk to us. Jason Boys and Fertill
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  Speaker 2: Chief executive.
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