Thursday, April 17, 2008

Infrastructure, Infrastructure, Infrastructure

Third time's the charm (or meme). Back in the '90's one of the highway bills got me looking at publicly held heavy construction contractors. I remember thinking that companies like Kasler or Granite would make great private companies, public, not so much.
Then I got distracted by an entrepreneur who wanted to raise some money to revolutionize the maple syrup industry, or some such.

I mention this history because the lesson I took away was with all the political back-scratching necessary in the infrastructure biz., the private money might have a leg up on the public players.
I don't mean that as disparagement, the public players are pretty savvy, it's just that they have to be faster, smarter and better capitalized than their private brethren. That being said-
First, two from the National Post:

Infrastructure spending expected to rise to US$2-trillion annually
Infrastructure has become a major theme in the global investment community with spending expected to average US$2-trillion annually through 2015. More than half of that is forecast to come from emerging economies. At the same time, the developed world is being forced to rebuild ageing infrastructure like airports, expand inadequate assets and respond to new demands like climate change.

In emerging markets, the public sector can tap large current account surpluses. But developed countries are seeing more private investment from sources like private equity, pension funds and sovereign wealth funds, which means reduced vulnerability to slowing spending in the public sector, Edward Kerschner, managing director of U.S. equity research at Citigroup said in a report

Bet on firms that make roads, bridges

Technical signs, fundamentals look positive

The infrastructure sector -- companies involved in the engineering and construction of roads, bridges, sewers, and the equipment used in their construction -- is a sub-sector of the industrial sector. It consists of six companies that are part of the TSX composite index: Aecon, Finning International, Russel Metals, SNC-Lavalin, Stantec and Toromont Industries.

All have Canadian operations and most have international operations....MORE

Finally, from the Financial Times:

3i Group closes India fund at $1.2bn

3i Group, the UK-based private equity firm, has closed one of the largest infrastructure funds in India, having raised a total of $1.2bn

The 3i India Infrastructure Fund, which raised 20 per cent more than initially targeted, benefited from sustained investor interest in India’s rapidly growing infrastructure sector and a favourable climate of rising asset values in the country.

“In many respects, the opportunities for ... your investment in infrastructure are probably greater in India than they are elsewhere in the world,” said Michael Queen, managing partner and head of 3i’s infrastructure business. “Many of these projects will be suitable for taking for an initial public offering in their own right.”>>>MORE

Update: from MarketWatch, 6:11 a.m. EDT

U.K. construction firms face bid-rigging accusation