CIBCHave a $39.00 target. GLTA
EQUITY RESEARCH
November 28, 2024 Flash Research
BROOKFIELD INFRASTRUCTURE
PARTNERS L.P.
NCIB Renewal A Normal Course Development
Summary: BIP announced that the TSX has accepted its intention to renew
the normal course issuer bid (NCIB) for its outstanding limited partnership
units and cumulative class A preferred LP units. The NCIB will begin on
December 2, 2024 and terminate on December 1, 2025. Under the NCIB,
BIP is authorized to repurchase up to 5% or up to 23,088,572 LP units.
During any trading day, the company can repurchase up to 126,133 LP units,
which represents 25% of the average daily trading volume for the six months
ended October 31. In addition, BIP is authorized to repurchase up to 10% of
the total public float of Series 1, 3, 9, and 11 preferred units. BIP did not
repurchase any units under its current NCIB in the past 12 months.
Similarly, BIPC is renewing NCIB for its outstanding class A exchangeable
subordinate voting shares, under which the company is authorized to
repurchase up to 10% of the total public float or up to 11,889,600
exchangeable shares. During any trading day, the company can repurchase
up to 46,896 shares, or 25% of the average daily trading volume for the six
months ended October 31. BIPC did not repurchase any shares under its
current NCIB in the past 12 months.
Financial Impact: We consider the NCIB renewal as a normal course of
development for BIP. While the company is staying within its target range of
60%-70% FFO payout ratio at a conservative 68.4% in Q3/24, BIP’s strong
capital project backlog limits the company’s potential to repurchase shares to
supplement normal distribution increases of 5%-9%. We see BIP using the
NCIB in the event of market volatility would create both a pullback in the unit
price and a slowdown in M&A activity