Global infrastructure set for rerating as private equity dives in

The gap in valuation between public and private infrastructure is narrowing, CBRE Clarion says. Photo: Phil Weymouth CBRE Clarion’s Jeremy Anagnos with UBS Asset Management chief Bryce Doherty. Photo: Christopher Pearce
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Shares in listed infrastructure groups are more likely to be boosted by private equity firms buying their shares in lieu of opportunities in the unlisted space, rather than the promise of fiscal stimulus, CBRE Clarion’s head of infrastructure says.

Australia’s relatively small infrastructure space includes some of the most expensive stocks on the S&P/ASX 200 Index, including Transurban and Sydney Airport. But the picture is much friendlier elsewhere, and public companies are trading at a discount to their private counterpart, chief investment officer of infrastructure at CBRE Clarion Securities Jeremy Anagnos said.

The sector has been a haven for pension and sovereign funds that have been driven out of bonds as yields, until recently, have tumbled to multi-year lows.

But while valuations of local stocks have soared due to the relatively small pool, outside of Australia, most of the capital from these funds have been into buying physical assets as opposed to shares, US-based Mr Anagnos said.

“The same phenomenon hasn’t played into the listed market,” he said.

“Our analysis says that on the average the pricing we’re seeing for assets transacting in the private markets implies that the assets held by the public companies are at a discount of around 15 to 20 per cent,” he said. ‘Dry powder’

Yet listed companies could be set to a rerating, due to a scarcity of private assets and there is plenty of cash to deploy. At the end of the third quarter, private capital sitting as “dry powder” globally topped $US136 billion ($178 billion), and that scarcity is driving them into buying shares, Mr Anagnos said.

“In the last six to 12 months there has been an increasing overlap or intersection of private infrastructure funds and large sovereign fund investments buying straight into public companies,” he said.

Global Infrastructure Partners, one of the largest private equity firms in the space sitting on as much as $US16 billion, last month bought a €3.8 billion ($5.4 billion), 20 per cent stake in publicly listed Spanish company Gas Natural. Last year, IFM took a 25 per cent stake in a Mexican toll road owned by OHL Mexico.

“This is a trend that will highlight the market and the more that capital starts to overlap, the more that [valuation] disconnect will start to narrow.”

The UBS Clarion Global Infrastructure Securities Fund holds 4 per cent of its total holdings in Transurban, with a 7 per cent invested in Australia. Almost half the fund is tied up in US shares. Among its top holdings it includes US-based Crown Castle International, Kinder Morgan, Sempra Energy and Canadian firm Enbridge. Reform cheer

Private equity will be cheered by the prospect of fiscal reform that has sprung up from the perceived limits of central bank policy and mooted by the likes of new British Prime Minister Theresa May and Japanese Prime Minister Shinzo Abe.

But more critical to the prosperity of the sector is the need for significant capital to be invested in ageing infrastructure assets and also a shift towards cleaner energy.

“It is far easier to get approvals from regulators to spend the capital [on refurbishment] because of the need for these assets not to cause harm,” Mr Anagnos said.

“The governments have been understanding of the need for new infrastructure and investment. But governments are not always able to follow through on what they talk about.”

Fiscal spending would be the “gravy” which will add to the investment case for infrastructure, but the time frame is more uncertain.

“It will bring awareness to the asset class more broadly and good for our economic environment, but it would be a plus to the investment case rather than what we build the investment case on.”

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Spring carnival 2016: Matt Cumani relying on the best for Melbourne Cup

Matt Cumani is better placed than most to comment on the raging debate between how Australian horse trainers prepare their distance horses as against their fellow horseman in Europe.
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As the son of highly successful trainer Luca Cumani, Matt Cumani has tasted both methods of getting your racehorse to run a distance.

Cumani, 35, maintains that in some instances Australians prepare their horse similarly to English and Irish trainers.

“It’s often referred to as the Aussie way of putting speed into their legs, but giving riding instructions to gallop a horse over seven furlongs and go home hard the final two furlongs is pretty much world standard,” he said.

“They worked them that way in Sydney, Melbourne, and Newmarket. In fact it’s a fairly standard approach to preparing race horses.”

Cumani has moved to Ballarat and has established his own training base and believes there are only a few telling differences in how trainers make stayers perform at there best.

Cumani has a Melbourne Cup runner this year, Grey Lion, who has enjoyed the best of both worlds.

“It’s just those subtle differences really when two horses gallop here, they leave the track straight away and while they’re still blowing they will be hosed down, scraped and sent back to their box,” Cumani said.

“But, in contrast, in England after our horses are worked they will take a leisurely hour walk home. And that’s the way of finding out little idiosyncrasies and also goes a long way to keep them relaxed and enjoy what they are doing. But it’s labour intensive because if you have 100 horses in work in England, you need perhaps 30 or 40 track workers to make the operation tick.

“And that’s a luxury that in Australia we can’t afford. It’s very expensive to hire so many extra riders that it’s just not worth it.”

Cumani believes that staying horses are unnecessarily put into shorter races in Australia on their way to their favourite distance journeys which may be 2000 metres or beyond.

Cumani points out that there is no need to have horses start preparations at 1400 metres, then 1600, and then to their favourite distance.

“I just get concerned that you start them at a distance a lot shorter than they are used to and they can become exhausted because of the taxing effects of racing at an unsuitable trip and they struggle to get their stride and rhythm,” he said.

“That’s why in Europe horses go straight into 2000-metre races or beyond. It’s feared that the horses become uncertain of what they are doing racing at a short distance.

“And then the next time they come to the races they don’t know what to do and they want to get the race over as quickly as possible so then you’ve got a horse that over races and pulls hard.”

Cumani maintains that Australian racing has incredible upsides at this time of year with the attention being solely focused on the sport.

“When the major races are on in England you don’t have soccer fans instantly becoming taken with racing. The sport in England is a niche sport,” he said.

“But in Australia it’s quite different, football fans begin to embrace racing as soon as the footy is over and the sport and the sporting landscape is all racing.”

And his hopes of winning a Melbourne Cup with Grey Lion may rely on the best of both worlds when preparing a stayer to win Australia’s most important handicap.

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Giving is receiving in good deed game

AUCTION: The property was snapped up by a Sydney investor for $622,000 and the proceeds were then donated to fund childhood cancer research.I was inspired last weekend by the building and sale of what they called the “Cure House” at Teralba.
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It got me thinking about charity and philanthropy and howI could probably give a little bit more than I do.

For those who missed it, the Children’s Cancer Institute, McDonald Jones Homes, McCloy Group and a number of other parties joined forces to celebrate International Childhood Cancer Awareness Month by building a house in under 21 days.

This seemed like a massive construction effortin itself, considering the time it can take to put together a flat pack barby from a hardware store, let alone a house.

But there was so much more to it.

The home was built on land donated by McCloy by over 120 tradies who lent their time free of charge to meet the challenge of getting the luxury project completed within the designated timeframe.

It was fully furnished by Freedom, with all kitchen and laundry appliances provided by Electrolux and home entertainment by Panasonic.

And if it all sounds like a bit of a plug, you’d have to say #accomplished.

The deednot only raised the profile of childhood cancer research in what is an unfortunately crowded marketplace of good causes, it raised funds. Lot’s of them.

The property was snapped up by a Sydney investor for $622,000 at an auction attended by such luminaries as Scott Cam from The Block, and the proceeds were thendonated to fund childhood cancer research.

Talk aboutfeel-good factor.

“We’re here to help, and we’ve got to help,” McDonald Jones Homes founder Bill McDonald told theNewcastle Heraldlast Sunday.

This got me thinking about the different levels of helping you can do, depending on your circumstances.

Charity, I thought, began at home, and philanthropy seems to begin when that home gets really big.

I think things like that when I hear about billionaires like Facebook founderMark Zuckerberg pledging $3billion to eradicate all disease in the lifetime of his children.

Talk about raising the bar.

Charity actually focuses on eliminating the suffering caused by social problems, while philanthropy focuses on eliminating social problems.

Feeding someone during a famine is charity while teaching someone how to grow food is philanthropy.

The Cure House project was surely an inspired combination of the two in that it was focused on eliminating the suffering of childhood cancer by generating funds to research causes to eliminate childhood cancer.

Zuckerberg’s pledge just reflectsthe different level we work on when it comes tosocial conscience. We’d do the same thing in his position if we became unfathomably rich, wouldn’t we?

There’s certainly no shortage of causes.

And of course it’s all relative. In fact, most of my generosity is aimed towards relatives –immediate ones mainly, which I often complain are sending me broke.

But that’s family for you.

You struggle and save andthen, according to Forbes Magazine, you amass an incredible fortune, a fraction of which you should give away, ala MrZuckerberg, Warren Buffett, George Sorosetc.

It’s called philanthropy, which Americans have become famous for, derived from the Greek words “philos,” which means loving, and “anthropos,” which means humankind.

Cynics might suggests “taxman-thropy” plays a role too,but indeed I was surprised recently to hear that a person I know contributes a weekly amount, beyond taxes, to causes she supports too.

I wasn’t so much surprised to hear that, as perplexed that I don’t do it.

The friend’s no billionaire but obviously rich in spirit, and It’s not as if it’s a new idea.

References to charity and philanthropy can be found through the ages in the Koran, Bible, Torah and in the teachings of many other religions and cultures, including Buddhism, Japanese and Native American cultures, Hinduism and the ATO.

There is no doubting what is the right thing to do; as fundraisers know only too well,the challenge is getting the doingdone.

Which gets us back to the Cure House.

Certainly, it wasthe right thing to do, although there may be a question mark over theslight kerfuffle that followed.

A refund claim by McDonald Jones Homes on certification fees totalling apiddly $1000 was rejected by Lake Macquarie City Council.

Voting to donate the money to another charity, LMCC ruled they have a responsibility to look after ratepayermoney and that the good publicity was rewardenough for the builder.

Technically that was probably the right thing to do as well. ButIt shouldn’t detract from what was an inspirational project.

City dump FFA Cup holders Victory to reach final after Cahill controversy

‘Two sets of rules’: Victory coach fuming at referee
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Melbourne City dumped holders Melbourne Victory out of the FFA Cup in a pulstating semi-final, winning 0-2 in front of nearly 16,000 fans at AAMI Park on Tuesday night to set up a final against Sydney FC.

The decider will be staged at the same AAMI Park venue on Wednesday, November 30.

The semi-final was a brilliant advertisement for the enmity that derbies develop, and for the intensity and passion generated by sudden-death cup soccer.

It had drama, controversy, niggle and spite, melees and confrontations as spotfires broke out all over the field.

Tim Cahill put himself about in a ferocious first 45 minutes when he looked as fired up as he was for any Merseyside derby back in his Everton days.

Carl Valeri, the Victory captain, threw himself into the fray at every opportunity, while Besart Berisha hustled, shouted and got in the face of City goalkeeper Dean Bouzanis on every occasion the shotstopper fluffed a clearance.

Victory coach Kevin Muscat – once a teammate of Cahill’s at Millwall – clashed with City’s star on the sideline; Cahill clashed with Jason Geria and Leigh Broxham. Geria went into the book for a rough challenge on Fernando Brandan and at every turn crunching tackles flew in, challenges were issued and never shirked.

This was a game in which no quarter was sought – nor any offered. The stakes were far higher than 10 days earlier, when City humiliated Victory 4-1 in the opening A-League derby of the season.

For Victory it was the chance to retain the trophy they won last season, for City the opportunity to win its first silverware and give its Manchester owners the first return on their investment.

It was also an immediate opportunity for Muscat’s men to prove what an aberration that derby loss had been.

Muscat ensured his side would not be bossed around in the same manner on this occasion, and they sought to impose themselves physically on their slicker oppponents from the outset.

But it was Lawrence Thomas who was the busier goalkeeper early, having to save from Cahill and then produce an excellent stop to deny Brandan.

A minute later – the ninth – came the game’s most controversial moment. Luke Brattan won the ball well in midfield from Fahid Ben Khalfallah and fed Brandan wide on the left. Brattan kept running forward as the winger cut in and played the ball back to him before Brattan fired a beautifully struck drive from outside the area past Thomas.

The only problem was that Cahill strayed into an offside position, and although he had not touched the ball he was in Thomas’ line of vision. The fact he had to duck to avoid the ball suggested he was interfering with play. The assistant referee cut short the City celebrations by flagging for offside but he was ultimately overruled by referee Shaun Evans, who allowed the goal to stand.

Victory’s North Terrace leaders had announced before the game that they would no longer co-ordinate active support, but in truth their influence was not missed in this match. There was plenty of singing and chanting, and every time Cahill went near the ball the cry of “here for the money, you’re only here for the money” rang out.

But they could not inspire their side to an equaliser in the first half, although they came close when City’s Danish defender Michael Jakobsen had to head off his own line and Bouzanis almost gifted Victory a leveller when his clearance cannoned into Besart Berisha and looped just over the bar.

Berisha had a golden opportunity to put his side back on level terms just after the half hour when he was set up with a great chance by Marco Rojas, but hit his cross over the bar. Shortly after, Baro’s header was dramatically saved by a diving Bouzanis as the temperature rose even higher.

Rojas had the ball in the net with 18 minutes remaining only for the goal to be ruled out as Berisha had played him on from an offside position. City put the tie beyond Victory’s reach with 13 minutes remaining when Paulo Retre robbed Nick Ansell and fed Nick Fitzgerald, his shot being seized on by Brandan to fire past Thomas.

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Fraudster won’t have to repay thousands

Convicted Lavington criminal Pauline Blake.Pauline Blake will never have to repay the thousands and thousands of dollars she ripped-off the community.
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It has been estimated she spent up to $25,000 collected for a bogus cancer charity on herself and her partner-in-crime, husband Dylan Blake.

But no compensation has been sought in the case, simply because there was no paper trail detailing who donated to the heartless fraudster.

The only punishment she has is a 12-month jail term that she will get to serve in her Lavington home.

Magistrate Tony Murray suggested to Blake she could have easily faced the more onerous penalty of prison time.

“It’s very fortunate that she didn’t come before me,” he said.“Obviously his honour found special circumstances.”

Fellow magistrate Michael Crompton previously ordered that Blake, 41, be jailed, though that this be in the form of home detention.

The court was told on Tuesday that Blake was deemed suitable for such an order, which Mr Murray then confirmed.

She was given a non-parole period of eight months, which means she will be allowed to leave home again on June 24 next year.

Blake was ordered to immediately return to her home to await the arrival of Community Corrections officers to fit her with monitoring equipment.

Dylan Blake will be sentenced on November 16, though because of parity in the matter – the pair carried out the ruse together, which meant each was charged with dishonestly obtaining property by deception – he too is unlikely to end up in jail.

Blake initially sobbed when she was given the 12-month jail term by Mr Crompton on September 14.

That was in sharp contrast to her relaxed demeanour on Tuesday, safe in the knowledge she would instead get to hang around her own home for a few months.

Mr Murray asked defence solicitor Chris Halburd whether compensation was being sought.

In reply, Mr Halburd said “no” as it was not known to who that money would be paid.

Blake came up with the idea of raising money for a fake cancer charity after her mother-in-law died of the disease.

They struggled to pay their bills, something which Mr Halburd previously indicated the crime was an offence “of need, rather than greed”.

Mr Murray though castigated Blake when she fronted court in early August.

“One would think there would be significant public condemnation of this type of behaviour. It’s a particularly callous deception.”

The fraud ran for three years from November in 2012 and involved walk-throughs in pubs and clubs and donations by businesses. Dylan Blake was not in court on Tuesday.

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