Infrastructure deals reflect savings needs

In uncertain times, there are not many things you can bank on staying the same for the next 50 years.

Britain remaining an island must be one of them.

Whatever happens with global warming, any visitors are likely to require a port (sea or air) or the Channel tunnel to make their way here. If this all sounds a bit obvious, bear in mind this is also the conclusion reached by two of the smartest financial institutions on the planet. It is no coincidence that, within the last few months, Goldman Sachs and Macquarie have shown interest in taking over the British Airports Authority, Associated British Ports and Eurotunnel.

Partly, it is because they can. Cheap debt means plenty of cash and aggressive financial engineering to knock down the most secure corporate defences.

The more interesting reason is because they have to. As stock markets falter around the world and hedge funds chase down the most esoteric bargains, it is harder and harder to provide the returns demanded by investors.

Nowhere is this pressure more apparent than among the so-called ?infrastructure? specialists. Not any old lump of concrete or steel will do.

Ideally, it needs to be a piece of infrastructure whose revenues are protected by some form of monopoly ? either natural, or artificially created by regulators.

Transport assets often offer both. Not only is this crowded island likely to keep needing runways and ports, it is hard to see who else is going to find room to build rival operations. Of the three latest investment targets, only Eurotunnel looks vulnerable to real frightening competition.

Of course, returns are low too. Traditionally, this was regarded as the dull end of business ? partly because no one was going to get rich working under a regulatory price cap.

Other protected utilities such as water, gas and electricity companies have often merely seen market risk replaced with regulatory risk.

What these stable cash flows do offer is a way to match the rather less predictable liabilities of many pension funds. As we all live longer, it becomes harder both to predict and fund the burden of keeping us happy and prosperous in our old age.

One certainty is BAA and ABP will be there helping fly us off to the sun and import our walking sticks.

World Cup travel plans

True to form, the football-related business excuses are coming thick and fast now.

In between their mock horror at the thought that employees might have been encouraged to throw a sickie to catch Thursday?s game, a number of employers are already counting the cost of the more widespread distraction among their customers.

Trevor Bish-Jones, chief executive of Woolworths, warned trading was down 50 per cent last Saturday afternoon when England played its opening match of the tournament.

Only the off-licences and crisp sellers seem to thrive on days like that.

As with most nibbles, this one deserves to be taken with a pinch of salt. Retailers are buffeted by all manner of one-off events but if we really want to pop to the shops, most of us still find time eventually. Any effect on sales tends to be short term.

More worrying noises have been emerging from the travel industry in the last few days. Already suffering from the rise of low-cost airlines and the ability to assemble do-it-yourself holiday packages on the internet, the tour operators are warning that many families are postponing their summer travel plans until they see how far England get in the World Cup.

MyTravel said bookings for this summer, while improving, continue to be behind last year.

This reflects a general trend to later booking, compounded in the UK and northern Europe by the World Cup, said the company.

How long national life is suspended depends on how far the national team goes. If the nation has to hold its breath until the final on July 9, there will not be much time left to plan a getaway. Those who leave it this late may be even more tempted to jump on a plane and try their luck without a tour operator to hold their hand.

Give Vodafone a break

There are so many legitimate grounds for concern about Britain?s biggest mobile phone company that it is hard to know where to start.

One good starting point is to recognise that Vodafone is a rare combination ? mature utility business and cutting-edge technology provider ? that requires world-class management and strategic thinking to overcome a near-fatal collapse in investor confidence. Sadly, there has been little evidence of this recently.

It is perfectly understandable therefore why some of the company?s many critics prefer to start by questioning why its current management continue to get paid so much. Either way, Vodafone needs the very best managers in the world right now ? and that costs money.

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