Its todays research that counts in asset sales
A word of caution – there is presently a lot of hot air being talkedabout investment opportunities in the ports sector. Some of it isunderstandable as, to be frank, it is coming from sources that claim tobe expert but frankly when their real credentials – and specificallytheir real success rate – is examined then it is evident that they arenot really qualified to offer an expert opinion.
Additionally, and let’s make no mistake here, yes there are a lot of opportunities but in themselves these do not necessarily constitute
good
investment opportunities. And I would further suggest that even one or two of the big international terminal operating groups have reached this conclusion about ‘assets’ which are currently housed in their respective terminal portfolios. It is undeniable that what looked like a good investment a year ago may not be so today – bottom line obtaining finance is a/ much, much more difficult and b/ it has a higher price tag attached to it.
Witness also, as potential evidence of this, Hutchison’s recent decision to walk away from the Thessaloniki concession, something which it bid a very high price for and which in today’s climate is a price which is perhaps too rich even for its blood!
Similarly, the machinations over the sale of the Grand Bahama Port Authority, whose diverse assets include the Freeport Grand Bahama, can be seen to have gone on too long and both suitors have in the current climate decided to walk away.
So when you hear statements like ‘there is this opportunity’ and ‘that opportunity’ which with relatively simple engineering can be brought neatly to the table and deliver a good return on investment then beware simplicities.
A detailed, discerning approach with an opportunity thoroughly checked out at every critical level before even considering the prospect of a bid is what is required in today’s market.
And again this is borne out by the actions of the long time professionals in the sector who have rapidly and progressively adopted a new much more rigorous approach to reviewing new opportunities.
In turn, this demands that those parties bringing to the attention of the private sector new port investment opportunities must be fully tooled up.
What does this mean? Well let’s take one simple example – there is a school of thought that suggests the UK government may be considering the sale of a number of its trust ports after the next election. Its understanding of the value of these ports, however, really follows on from work undertaken by PriceWaterhouseCoopers into the status and management of trust ports and which it reported on in 2007. 2007-2009? I am sure you appreciate the difference in economic climate and that to base any sale initiative on conclusions reached in 2007 would be a rather foolish thing to do!