Shares of APA Group Rapidly Increase on $13 Billion Offer

Cheung Kong Infrastructure Holdings (CKI) — A Hong Kong-based power utility and infrastructure company — has recently made a multi-billion dollar investment in APA Group Stapled Securities [ASX:APA].

With APA shares increasing by 20.98%, its share value went from $8.42 to $10.05 in a very short amount of time.

Clearly there is tangible potential in this pipeline monopoly. And CKI are ensuring they reap all the benefits should this potential become a reality.

How big are we talking?

Currently, APA hold a large monopoly of utility assets in Australia.

The only other company that even comes close to measuring up to APA is Envestra, who are currently running thousands of kilometres worth of gas pipelines.

ABC News reported:

Putting them together would certainly prompt very sharp scrutiny from the Australian Competition and Consumer Commission, which has long held concerns about pricing in an industry that is largely a duopoly already, and only lightly regulated.

CKI are interested in both of these giants. They want in on the Australian energy sector.

This could lead to APA and Envestra working alongside each other, to ensure everyone gets the best end of the deal.

The plan of attack

The proposed offer is a sort of package, enticing APA’s interest a variety of pipelines and gas-storage facilities.

However, though they may be easily tempted, with its market cap being valued at $11.805 billion, a takeover of APA will not be easy.

But CKI are up for the challenge.

They have already gone through a $7.4 billion takeover of DUET group last year — a former trader of Australian energy utility assets.

They won that fight, despite being knocked down earlier — in a joint bid with a Chinese State Grid Corporation — for the purchase of a New South Wales electricity distributor.

The APA board is currently evaluating the potential takeover. They are aware how attractive APA’s high divisional growth looks to investors.

Time will tell how it turns out.

Ryan Dinse,

For Markets & Money

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Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

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