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Brookfield Infrastructure Partners L.P. (BIP.UN)
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Brookfield Infrastructure Corporation Class A Exchangeable Subordinate Voting Shares (BIPC)
Q: Further to my previous question on this topic I’m Attaching report claiming these two stocks do indeed own different assets
I’m wary of holding BIPC because the new corporation only owns a small subset of the partnership’s global infrastructure assets. Is this a concern?
It’s true that BIPC directly owns only natural gas transmission assets in Brazil and regulated utility operations in the United Kingdom. However, the fact that BIPC shares are exchangeable into BIP.UN units and both will pay the same dividend/distribution means BIPC investors are getting access, albeit indirectly, to the complete global portfolio of infrastructure assets including railways, ports, toll roads, pipelines, communications towers and data centres. It also means that BIP.UN units and BIPC shares should track each other closely in price, which has been the case so far. (My note: NOT TRUE)
“In order to effectuate the stock split, we were required to transfer assets to BIPC since it’s a separate reporting issuer/listed entity,” Ms. Low said.
“The assets we chose to transfer (being the gas transmission system in Brazil and regulated distribution operations in the U.K.) were selected as they were relatively easy to transfer considering regulatory, legal, financial and tax implications,” she said.
“So while BIP LP and BIPC do hold different assets, investors should be indifferent as BIP LP and BIPC should be considered one entity, which collectively share the same assets, returns and management.”
Full disclosure: The author owns BIP.UN and BIPC personally and in his model Yield Hog Dividend Growth Portfolio
I’m wary of holding BIPC because the new corporation only owns a small subset of the partnership’s global infrastructure assets. Is this a concern?
It’s true that BIPC directly owns only natural gas transmission assets in Brazil and regulated utility operations in the United Kingdom. However, the fact that BIPC shares are exchangeable into BIP.UN units and both will pay the same dividend/distribution means BIPC investors are getting access, albeit indirectly, to the complete global portfolio of infrastructure assets including railways, ports, toll roads, pipelines, communications towers and data centres. It also means that BIP.UN units and BIPC shares should track each other closely in price, which has been the case so far. (My note: NOT TRUE)
“In order to effectuate the stock split, we were required to transfer assets to BIPC since it’s a separate reporting issuer/listed entity,” Ms. Low said.
“The assets we chose to transfer (being the gas transmission system in Brazil and regulated distribution operations in the U.K.) were selected as they were relatively easy to transfer considering regulatory, legal, financial and tax implications,” she said.
“So while BIP LP and BIPC do hold different assets, investors should be indifferent as BIP LP and BIPC should be considered one entity, which collectively share the same assets, returns and management.”
Full disclosure: The author owns BIP.UN and BIPC personally and in his model Yield Hog Dividend Growth Portfolio
