|
Angel Lodge HMO
Tel:020-88561331 Fax:020-85169270. Address:68 Wricklemarsh Road, SE3 8DS, Blackheath, Greenwich, London.
|
|
Angel Lodge HMO - Blackheath-Greenwich-London
London airport sale underlines infrastructure boom
LONDON (Reuters) - Irish financier Dermot Desmond's deal to sell London's City Airport for over 700 million pounds just 10 years after buying it for about 24 million, underscores the voracious appetite for infrastructure assets which have sent valuations through the roof.
sparked bidding wars which have attracted investors -- from pension funds to investment banks -- keen to get their hands on assets with stable cash flows and long term earnings visibility.
According to finance industry data provider Thomson Financial there have already been more mergers and acquisitions in infrastructure in 2006 than in the previous four years put together.
In total, investors have snapped up a whopping $145.38 billion (78 billion pounds) worth assets so far this year on some 242 deals, with cash-rich private equity firms leading or backing 53.1 percent of the total.
The figures do not include Wednesday's City Airport deal or the upcoming sale of Thames Water, which is being sold by Germany's RWE
and which Thomson counts as infrastructure as opposed to utilities because of its steady cashflows.
The City Airport deal comes on the same day top investors, including Australia's acquisitive Macquarie Bank, were meeting at an infrastructure conference in London.
Arthur Rakowski, executive director of Macquarie Bank, which has an infrastructure division and is a major player in the sector, said high demand meant prices of some infrastructure assets were stretched.
"Prices (of assets) are perhaps a bit frothy at the moment and you can reasonably expect that as more people come into the market ... that prices will go up and margins will go down," Rakowski said.
Macquarie itself lost out on a battle to buy British ports group AB Ports earlier this year after Goldman Sachs' infrastructure fund pipped them at the post with a higher bid.
High valuations were also evident in the race to buy airport operator BAA Plc. The group's value jumped by 1 billion pounds in a day when Spain's Ferrovial
said in February it was interested in a possible cash bid for the group.
A bidding war eventually saw Ferrovial pay a higher-than-expected 10.1 billion pounds for the group.
Still, there is room for plenty of competition as Europe's market for infrastructure assets is vast, as governments continue to sell off state assets, and can absorb new investment over the long term, said Peter Hobbs, head of global real estate and infrastructure research at RREEF, a research and property management division of Deutsche Bank.
Once a relatively obscure and staid segment of the investment arena, the market in assets such as ports, toll-roads, privatised water firms or electricity distribution companies has become a hot talking-point for investors, he said.
These companies typically enjoy strong pricing power and in some cases, are typically underwritten by the taxpayer, which means they can enjoy steady income growth and have the security of a low-risk asset like a government bond, he said.
RREEF estimates that the European economic infrastructure market is now worth between 4 and 5 trillion euros, compared with European equity and bond markets, which it put at around 8 trillion euros and 11.3 trillion euros respectively.
Europe's pension funds have been among the main drivers of infrastructure investment as the opportunities in traditional real estate have narrowed, because of their need for assets that offer decades of predictable returns at relatively modest levels of volatility.
In September, Hermes, the fund manager running the giant pension scheme of UK telecom BT Group plc
, said it was moving to significantly increase exposure to assets such as infrastructure.
Infrastructure is already an established asset class for Australia's large pension funds and the funds have also made inroads into the British market.
Last year, for example, one of Macquarie's infrastructure funds won business from institutions including the British Airways
Pension fund.
Last updated: 11-Oct-06 18:33
Angel Lodge HMO - Blackheath-Greenwich-London
Tel:020-88561331 Address:68 Wricklemarsh Road, SE3 8DS, Blackheath, Greenwich, London.
Email: General Information: artworld@hotmail.com Webmaster: artworld2@hotmail.com
|
|
Angel Lodge Blackheath-
Greenwich-London
Blackheath Halls
A beautiful period building which these days plays host to a variety of music and entertainment.
Bluewater Shopping Centre
Carrentals.co.uk
Rent your car now! From Carrentals.
www.terre-ireland.com
|
