About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   tmmonline.nz  |   landlords.co.nz
Last Article Uploaded: Thursday, March 21st, 2:53PM
rss
Investment News

Dire Straits for Infrastructure Funds

One of the Cook Strait ferry operators, Strait Shipping, was mentioned in the news recently. Although it doesn’t feature in any of Castle Point’s investments, it did tweak our interest.

Tuesday, September 18th 2018, 8:00AM

by Castle Point Funds Management

Strait Shipping was established by Jim Barker in 1992, who needed a reliable and cost-effective way of moving his livestock between the North and South Islands.

Strait Shipping was what might be considered a ‘disrupter’, a new entrant with an offering capable of taking material market share from the incumbent. To truly qualify as a disrupter, the new entrant generally needs a different operating model, resulting in either a superior offer or a significantly lower price. 

In this case, not being owned by NZ Rail was enough. The ferry service underwent numerous changes in direction and in 2016 the Barker family sold to the Australian based Private Equity firm, Champ.

Several times every day most of the company’s assets, staff and customers are sent across the Cook Strait. We’re not talking about the levels of risk taken on by explorers crossing the Pacific in canoes, Christopher Columbus, or competitors in the Volvo Ocean Race, but neither are we running a business that delivers parcels, runs a seaport or airport, generates electricity from rain or manufactures cement and plasterboard.

This is a tough business. Volatile fuel costs are a significant input, the main competitor is state-owned and does not necessarily price commercially, weather events frequently lead to delays and even service cancellations.

And, if significant returns can ultimately be made, there is little to stop another crew (pun intended) buying another ferry and setting up in competition. Congratulations are indeed due to the Barker family.

More recently, Champ has brought on a co-investor, Macquarie Group. What tweaked our interest was Macquarie’s reported intentions for their new purchase.

The Macquarie infrastructure funds already own several ferry operators such as Condor Ferries, Wightlink, and an Isle of Man operation. The Strait Shipping entity is expected to be combined with these operations and marketed to “infrastructure-minded” investors.

An “infrastructure-minded” investor we suspect is expecting investments with reliable income characteristics, that have traditionally included the likes of airports, electricity networks, toll roads and seaports.

These assets are typically unique, expensive to build and have little competition, resulting in dependable long-term profits, often to the point that they are regulated.

In our opinion, a ferry operator is not an infrastructure investment. Compared to its transportation peers it is closer to an airline, a shipping company, or even a sub scale trucking company. It is the user of infrastructure, not infrastructure itself.

So, if you are considering an investment into an infrastructure fund or are perhaps an “infrastructure-minded” investor, it would pay to beware, the lines seem to be getting rather blurred.

Tags: Castle Point investment

« Perspective On Markets - It's An Age ThingInvesting: The Good-Bad-Good of Share Buybacks »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend

Good Returns Investment Centre is brought to you by:

Subscribe Now

Keep up to date with the latest investment news
Subscribe to our newsletter today

FundSource Research
  • AMP Capital Global Companies Fund
    8 March 2019
    The AMP Capital Global Companies Fund provides investors access to a concentrated portfolio of what the Manager believes to be exceptional global companies...
  • Harbour Income Fund
    11 February 2019
    The Harbour Income Fund is a diversified fund, with holdings across different asset classes, has relatively broad asset allocation ranges, and is reasonably...
  • Nikko AM Option Fund
    1 February 2019
    The Nikko AM Option Fund is a retail Fund that invests in to the Nikko AM Wholesale Option Fund. In both cases the Fund sells short term options to financial...
© 2019 FundSource Research.

View more research papers »

Edison Investment Research
  • Invesco Asia Trust
    19 March 2019
    Disciplined Asia specialist, solid long-term returns
    Invesco Asia Trust (IAT) aims to provide significant capital returns over the long-term through investing in listed companies in Asia. It follows a rigorous...
  • Jupiter Green Investment Trust
    14 March 2019
    Growing opportunity set drives higher income
    Jupiter Green Investment Trust (JGC) is continuing to benefit from the greater public interest in green issues, which is driving demand growth for companies...
  • Standard Life Private Equity Trust
    13 March 2019
    Broader capability expands the opportunity set
    Standard Life Private Equity Trust (SLPET) has broadened its opportunity set through the recent revision to its investment objective and policy, allowing...
© 2019 Edison Investment Research.

View more research papers »

Today's Best Bank Rates
Heartland Bank 2.50  
Heartland Bank 2.50  
Based on a $50,000 deposit
More Rates »
Cash PIE Rates

Cash Funds

Institution Rate 33% 39%
ANZ 0.10    0.10    0.11
ASB Bank 0.10    0.41    0.42
ASB Bank 0.25    0.59    0.56
ASB Bank 0.30    0.61    0.64
ASB Bank 0.35    0.66    0.69
ASB Bank 0.40    0.72    0.75
BNZ 0.10    0.10    0.10
Heartland Bank 2.25    2.59    2.70
Kiwibank 0.75    0.77    0.88
Kiwibank 1.75    1.81    1.89
Nelson Building Society 3.75    3.90    4.08
SBS Bank 1.50    -    -
TSB Bank 1.60    1.64    1.71
Westpac 0.35    0.36    0.38
Westpac 0.10    0.10    0.11
Westpac 2.10    2.16    2.26

Term Funds

Institution Rate 33% 39%
ANZ Term Fund - 90 days 2.65    2.60    2.79
ANZ Term fund - 12 months 3.40    3.39    3.55
ANZ Term Fund - 120 days 3.00    3.09    3.22
ANZ Term fund - 6 months 3.25    3.45    3.60
ANZ Term Fund - 150 days 3.00    -    -
ANZ Term Fund - 9 months 3.40    -    -
ANZ Term Fund - 18 months 3.45    -    -
ANZ Term Fund - 2 years 3.50    -    -
ANZ Term Fund - 5 years 3.80    -    -
ASB Bank Term Fund - 90 days 2.60    2.67    2.79
ASB Bank Term Fund - 6 months 3.20    3.29    3.43
ASB Bank Term Fund - 12 months 3.20    3.33    3.48
ASB Bank Term Fund - 18 months 3.50    3.65    3.81
ASB Bank Term Fund - 2 years 3.65    3.81    3.98
ASB Bank Term Fund - 5 years 4.10    4.28    4.48
ASB Bank Term Fund - 9 months 3.60    3.75    3.92
BNZ Term PIE - 120 days 2.90    -    -
BNZ Term PIE - 150 days 2.95    3.38    3.53
BNZ Term PIE - 5 years 3.60    3.86    4.04
BNZ Term PIE - 2 years 3.45    3.91    4.09
BNZ Term PIE - 18 months 3.40    3.65    3.81
BNZ Term PIE - 12 months 3.40    3.38    3.53
BNZ Term PIE - 9 months 3.35    3.44    3.60
BNZ Term PIE - 6 months 3.25    3.75    3.92
BNZ Term PIE - 90 days 2.65    2.72    2.85
Co-operative Bank PIE Term Fund - 6 months 3.40    -    -
Heartland Bank Term Deposit PIE - 12 months 3.60    3.53    3.69
Heartland Bank Term Deposit PIE - 6 months 3.45    3.43    3.58
Heartland Bank Term Deposit PIE - 9 months 3.50    3.85    4.02
Heartland Bank Term Deposit PIE - 18 months 3.60    -    -
Heartland Bank Term Deposit PIE - 2 years 3.70    3.43    3.58
Heartland Bank Term Deposit PIE - 5 years 3.90    3.85    4.02
Kiwibank Term Deposit Fund - 90 days 2.65    2.72    2.82
Kiwibank Term Deposit Fund - 6 months 3.40    3.49    3.65
Kiwibank Term Deposit Fund - 12 months 3.50    3.39    3.55
Kiwibank Term Deposit Fund - 150 days 3.15    3.65    3.81
Kiwibank Term Deposit Fund - 120 days 2.95    3.03    3.17
Kiwibank Term Deposit Fund - 9 months 3.40    3.49    3.65
Westpac Term PIE Fund - 150 days 3.00    2.88    3.00
Westpac Term PIE Fund - 120 days 3.30    3.38    3.53
Westpac Term PIE Fund - 18 months 3.50    3.29    3.43
Westpac Term PIE Fund - 12 months 3.50    3.49    3.65
Westpac Term PIE Fund - 6 months 3.30    3.44    3.60
Westpac Term PIE Fund - 9 months 3.35    3.17    3.32
Westpac Term PIE Fund - 90 days 2.75    2.56    2.67
Westpac Term PIE Fund - 2 years 3.70    3.79    3.96
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com