"Both MIG and Transurban have also found it impracticable to operate independently in the U.S."
Two operators take different on-ramps to access US tollways
August 25, 2006
Rod Myer
The Age (Australia)
Copyright 2006
AUSTRALIA'S two major listed tollway operators, Macquarie Infrastructure Group and Transurban, have both adopted the US as their second home, a reflection of the lack of reasonably priced opportunities in Australia.
MIG pioneered the US market, bidding more than $US1 billion more than rivals to grab control of the Chicago Skyway in 2005.
Both MIG and Transurban have also found it impracticable to operate independently in the US and have taken different approaches to remedying that. Transurban will launch an unlisted fund in the US worth about $US1 billion. It plans to list it when its value reaches $US2 billion. MIG has teamed up with an unlisted, US-based Macquarie offshoot and the two will share a $US1.5 billion fund to begin with.
MIG shares have lost 22.5 per cent in the past year. Transurban is down 1.8 per cent.
The sector is unloved because investors fear higher interest rates will damage it. MIG has been seen as more vulnerable than Transurban. In the past year it has spent $1.8 billion on two US toll roads and a stake in the massive French APRR network. Transurban spent $800 million on US expansion, admittedly from a lower asset base.
The market seems to have favoured Transurban for two reasons: it borrows less aggressively and it pays no fees to a parent. Transurban funds distributions 43 per cent from borrowings. MIG does so at 60-70 per cent even in a year when no performance fees are paid. MIG's capital management reforms will have to yield results before the market sees it differently.
The reporter has Transurban shares.
© 2006 The Age: www.theage.com.au
August 25, 2006
Rod Myer
The Age (Australia)
Copyright 2006
AUSTRALIA'S two major listed tollway operators, Macquarie Infrastructure Group and Transurban, have both adopted the US as their second home, a reflection of the lack of reasonably priced opportunities in Australia.
MIG pioneered the US market, bidding more than $US1 billion more than rivals to grab control of the Chicago Skyway in 2005.
Both MIG and Transurban have also found it impracticable to operate independently in the US and have taken different approaches to remedying that. Transurban will launch an unlisted fund in the US worth about $US1 billion. It plans to list it when its value reaches $US2 billion. MIG has teamed up with an unlisted, US-based Macquarie offshoot and the two will share a $US1.5 billion fund to begin with.
MIG shares have lost 22.5 per cent in the past year. Transurban is down 1.8 per cent.
The sector is unloved because investors fear higher interest rates will damage it. MIG has been seen as more vulnerable than Transurban. In the past year it has spent $1.8 billion on two US toll roads and a stake in the massive French APRR network. Transurban spent $800 million on US expansion, admittedly from a lower asset base.
The market seems to have favoured Transurban for two reasons: it borrows less aggressively and it pays no fees to a parent. Transurban funds distributions 43 per cent from borrowings. MIG does so at 60-70 per cent even in a year when no performance fees are paid. MIG's capital management reforms will have to yield results before the market sees it differently.
The reporter has Transurban shares.
© 2006 The Age:
posted by Porkus Maximus Tex: at Thursday, August 24, 2006
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