Infrastructure Investments (Aus)

Mates, Here i need specific comments on infrastructure invs. Can someone please throw some light at the analsyis/approach/important distinguishing features related to the infrastructure investment opportunities/projects?? Thanks in advance. bluemoon, CFA (yeah sometime this month)

Hey Bluemoon, Sorry, I’m in the dark about infrastructure trusts. I have a question for you though. Do you think the current ‘talent shortage’ in Australia is as substantial as the media makes it out to be? Does this bode well for someone like me who’s thinking of working in Australia (in banking/finance or capital markets)? Thx

“Infrastructure” covers a hugely wide range of possible investments - what specifically are you looking at? The range of types of risk is large, and the cashflows arising can be fixed or variable. It’s a very broad church, and depends upon both the stage of the infrastructure project and the type of cashflows involved. A new project will have execution risk (ask Multiplex about our new Wembley stadium!), where as one which is already built won’t. Then you have the different types of projects - hospitals, toll roads, electricity grids, water companies, airports - some will have more stable cash flows than others. In the UK, a hospital/prison etc built under a PFI contract will have a government backed contract with stable cashflows, so tend to be priced off gilts. However an airport/toll road will be subject to passenger/traffic flows, and water companies/electricity grids will be subject to government regulatory changes and the like. Personally, I think calling a water company/airport “infrastucture” is a pig with lipstick. These are just utilities/transport companies, but MacQuarie and the like have packaged them up into ETFs and all sorts of wonderful products and sold them as diversifiers. But these are my free opinions. They differ from my paid ones in that they are worth nothing :wink: PS. The wife is from Brisvegas, I’d be interested in Yogster’s question too…

Chris, thanks for your comments. Yogster, Personally I would reluctantly disagree with the talent shortage assertion. Yes, there are growing number of opportunities available but the supply is also not that bad. In addition to CFAI, there are few very reputable institutions, such as Macquarie Applied Finance Centre and Finsia, offering postgraduate finance courses. I have noticed that recently these institutions have started focusing on numbers, which is not very encouraging from supply side of labour mkt (for banking/finance), specially when we have increasing number of CFA candidates as well.

Anyone have comments on the Babcock & Brown funds?