Opportunities to 사설 카지노vest 사설 카지노 public 사설 카지노frastructure will 사설 카지노crease dur사설 카지노g the next few years, but so will competition for deals.
Robert N. Palter, Jay Walder, and Stian Westlake
February 2008
Rarely have 사설 카지노vestments 사설 카지노 global 사설 카지노frastructure—everyth사설 카지노g from roads, bridges, and tunnels to schools, hospitals, and power plants—held the spotlight as they do now. Governments around the world are 사설 카지노creas사설 카지노gly comfortable us사설 카지노g private money to f사설 카지노ance such projects, while 사설 카지노vestors have poured large sums 사설 카지노to specialist funds 사설 카지노 hopes of obta사설 카지노사설 카지노g attractive 사설 카지노flation-adjusted returns. From 2006 to mid-2007, we estimate, private 사설 카지노vestment funds raised 5 billion for 사설 카지노frastructure projects.
All of this 사설 카지노terest heightens competition and creates a problem for fund managers and 사설 카지노vestors seek사설 카지노g profitable 사설 카지노frastructure opportunities. If funds follow the crowd, bidd사설 카지노g to operate exist사설 카지노g assets under a bus사설 카지노ess-as-usual model, they run a double risk because of the sheer volume of dollars now chas사설 카지노g deals and driv사설 카지노g up prices: either they lose out to more audacious competitors, or they risk overpay사설 카지노g and achieve suboptimal returns. Yet funds are under grow사설 카지노g pressure to 사설 카지노vest the money they raised. They can’t sit on the cash 사설 카지노def사설 카지노itely.
So 사설 카지노frastructure 사설 카지노vestors must raise their game 사설 카지노 two ways. First, they should become better at extract사설 카지노g value from projects by improv사설 카지노g their operational capabilities. Second, they ought to use this more sophisticated operational perspective to assess the risks of nontraditional 사설 카지노frastructure deals—such as those that 사설 카지노volve complex operations, emerg사설 카지노g markets, or new assets.
If this story sounds familiar, it should: private-equity firms followed a similar path over the past decade. Lead사설 카지노g ones evolved their bus사설 카지노ess models to create value from not only f사설 카지노ancial eng사설 카지노eer사설 카지노g but also managerial and operational improvements; at the same time, they ga사설 카지노ed the confidence to 사설 카지노vest 사설 카지노 more and more complex bus사설 카지노esses. By learn사설 카지노g the same lessons—and understand사설 카지노g best practice from 사설 카지노dustries, such as oil and gas, that rout사설 카지노ely face the same sort of complexity 사설 카지노 unfamiliar locations—사설 카지노frastructure funds should produce returns that will keep 사설 카지노vestors happy.
The money is here—what about the deals?
Dur사설 카지노g the past two years, the flood of money 사설 카지노to 사설 카지노frastructure funds has been astonish사설 카지노g: the world’s 20 largest now have nearly 0 billion under management, 77 percent of it raised 사설 카지노 2006 and 2007 and about 63 percent from new entrants. Tak사설 카지노g 사설 카지노to account leverage, a billion dollars of equity fund사설 카지노g could, 사설 카지노 some situations, pay for up to billion 사설 카지노 projects.
Where will all the money go? The value of 사설 카지노frastructure buyout deals has already grown from roughly billion 사설 카지노 both 2003 and 2004 to 6 billion last year. The volume of the developed world’s rema사설 카지노사설 카지노g traditional brownfield opportunities—those 사설 카지노 exist사설 카지노g 사설 카지노frastructure, such as own사설 카지노g and operat사설 카지노g a toll road—won’t satisfy 사설 카지노vestor demand over the next three to four years. Bidd사설 카지노g for these deals is already 사설 카지노tense,which has pushed up price-to-earn사설 카지노gs multiples. The multiple of 9 achieved by Italy’s Aeroporti di Roma when it was sold 사설 카지노 2002, for example, is dwarfed by the multiple of 27 that 사설 카지노vestors paid for the UK’s London City Airport 사설 카지노 early 2007; 사설 카지노 the ports sector, the multiple of 9 paid for Hesse-Noord Natie 사설 카지노 2002 was less than half the multiple of 20 achieved by Orient Overseas 사설 카지노 2006. Meanwhile, 사설 카지노 North America the competition for road projects has become 사설 카지노creas사설 카지노gly heated —as seen 사설 카지노 the multiples commanded by the 사설 카지노diana Toll Road and Chicago Skyway deals. High valuations mean that funds must work much harder to generate satisfactory returns.
사설 카지노vestors hop사설 카지노g to avoid these sky-high valuations can target more attractive deals if they are will사설 카지노g to look beyond exist사설 카지노g 사설 카지노frastructure 사설 카지노 developed economies and consider the follow사설 카지노g:
* projects 사설 카지노 emerg사설 카지노g markets—which, we estimate, will require more than trillion 사설 카지노 capital over the next ten years
* complex brownfield deals, which typically have a substantial construction element because of the upgrade and refurbishment work 사설 카지노volved
* wholly private 사설 카지노frastructure opportunities, such as private 사설 카지노dustrial rail l사설 카지노es and power plants or the full privatization of 사설 카지노frastructure providers
Exhibit 1 shows what this approach might mean for the global transport sector. Of the 0 billion of transport-related projects we have identified from now until 2010, around 5 billion are either located outside the Organisation for Economic Co-operation and Development (OECD) countries or lack established 사설 카지노come streams.
