Infratil shares jump First accredited labgrown diamond seller on Longroad news
AUCKLAND: Infratil’s share price has hit a record high after announcing the value of its stake in a United Statesbased renewable energy company has increased more than threefold in three months.
The catch is the independent valuations it has had done have used different methodologies.
The NZXlisted company yesterday announced it and the New Zealand Superannuation Fund are each investing a further $US100 million ($NZ159 million) in Longroad Energy to retain their stakes of about 37%.
Their moves come as the asset manager of reinsurance giant Munich Re has agreed to invest $US300 million in Longroad to acquire a 12% stake.
In a statement, Infratil said its stake in Longroad was valued at $US798 million on June 30, based on the assumption the proposed capital raise and transaction went through.
That was significantly higher than a valuation dated March 31, which concluded its stake was worth only $US220 million.
‘‘Infratil is extremely happy with this outcome,’’ chief executive Jason Boyes said in the statement.
‘‘We remain very optimistic about the opportunities and outlook for Longroad and are pleased to be increasing our investment as part of this transaction.’’
Mr Boyes said Munich Ergo Asset Management’s investment in Longroad was also a ‘‘strong endorsement of the business and the sector’’.
When the NZX closed yesterday, Infratil’s share price was up 56c to $8.94. It had reached a record high of $9.06 earlier.
Asked what was behind the massive rise in valuation of Infratil’s stake in Longroad, Mr Boyes said that in March, the independent valuer only considered the value looking one year ahead, whereas in June, it considered the value across multiple years into the future.
‘‘The value was always there, but now it’s recognised,’’ he said.
A valuation had not been done in June using the same methodology as in March, so apples could not be compared with apples.
The company’s statement said Longroad had developed and acquired 3.2 gigawatts of wind and solar projects since its establishment in 2016. It still retained 1.5GW of that sum and had a 15GW development pipeline composed of wind, solar, solar and storage, and standalone storage assets across 13 US states.
NZ Super Fund head of external investments and partnerships Del Hart said it had been exciting to see Longroad grow since the fund first invested in.
‘‘Longroad has been one of the NZ Super Fund’s most successful investments,’’ she said.
Longroad chief executive Paul Gaynor said the extra capital would allow Longroad to ‘‘maximise its competitive position in what remains one of the most attractive markets in the world for renewable energy investment’’.
Longroad management has a 14% stake in the company.
Munich Ergo Asset Management’s investment is subject to approvals from the US’s Federal Energy Regulatory Commission and the Commission on Foreign Investment.
This transaction is expected to be completed in the last quarter of the calendar year. —
AUCKLAND: Jewellery chain Michael Hill has become the first major retailer in Australasia to become an accredited seller of laboratorygrown diamonds.
The NZX/ASXlisted retail chain, which operates 280 shops throughout New Zealand, Australia and Canada, first started selling labgrown diamonds in 2020 and has seen sales within this category increase more than 180%.
Michael Hill’s range of labgrown diamonds are certified under the SCS007 Jewellery Sustainability Standard as part of SCS Global Services’ Sustainability Rated Diamond programme.
Michael Hill chief executive Daniel Bracken said the accreditation was part of the retailer’s ongoing drive towards sustainability.
The retailer said it had noticed a large increase in consumers opting to buy laboratorycreated diamonds, particularly among the younger generation.
‘‘We’re in the business of celebrating the special moments in people’s lives and we know the story behind the jewellery matters,’’ Mr Bracken said.
‘‘We’ve long had a focus on responsibility and ethical sourcing, and our offering of certified sustainabilityrated laboratorycreated diamonds is an important part of our ongoing sustainability commitment.’’
As part of the programme, Michael Hill’s laboratorygrown diamonds can be traced back to their source of manufacture and these producers have committed to climate impact neutrality, through either eliminating or offsetting their emissions.
Michael Hill’s financial earnings have improved dramatically since 2020.
It is unclear if this is because of its sales of labgrown diamonds. In the year to June 2021, the retailer posted a $A45.3 million ($NZ50.3 million) net profit after tax, compared with $A3.1 million in 2020.
In a recent trading update, Michael Hill said its store sales were up 7% in the current financial year, and it anticipated a net profit before tax of between $A60 million and $A63 million for fullyear 2022.
Labgrown diamonds are fast becoming popular within the jewellery business, but draw scepticism over whether they are merely a marketing ploy rather than a clean alternative to natural, mined diamonds.
Some in the industry believe the creation of laboratorygrown diamonds causes more — if not just as much — damage to the environment as traditional diamonds, which take thousands of years to be made.
Retail commentator Chris Wilkinson, managing director of First Retail Group, said Michael Hill’s formal move into labgrown diamonds was a smart one for the retailer, which operated at the premium end of the jewellery market.
Michael Hill’s push into the synthetic diamond sector reflected what other major jewellery chains were doing around the world — both for environmental and economic reasons — and could also be validated by the move into that market by De Beers, the world’s largest diamond producer, he said. —
❛ The value was always there, but now it’s recognised