Macquarie International Infrastructure Fund

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#74
(16-10-2011, 08:45 PM)weijian Wrote: nice conspiracy theory? Tongue
actually i do not understand what do u mean by 'MIIF can't influence the Fund as it did before' ?
i mean, the manager is MIMAL, it belongs to Mac group and it determines MIIF's strategy. Since MIIF controls majority stakes in TBC/CXP/HNE, according in AR2010, John Lawson Stuart (CEO of MIMAL) sits on the board of those 3 entities as well!

Hi Weijian,

I guess my choice of words were poor haha !

Previously, MIIF created value through asset trading (which ran contrary to their stated objectives of long term investments). MIMAL purchased minority stakes in infrastructure assets and sold them 2-3 years later at huge profits. Asset Divestment History - http://www.valuebuddies.com/thread-843-p...ml#pid7480 This created huge book value growth and shareholders were rewarded with phenomenal distributions since the excess profits from capital gains (and leverage from borrowings at Fund level) were used to purchase new investments. They bought minority stakes in large assets and I guessed they hope to sell in the medium term at a profit. In other words, value was created (and subsequently destroyed) by MIMAL directly by their active portfolio management via capital and debt. The individual manager in each of the investments didn't impact much directly since MIIF diversified its assets and held minority stakes (no control). They will eventually find out how disastrous this will be.

Since 2009, they became more cautious and halted the asset trading policy. Instead, value in the form of book value growth and distributions were tied directly to the performance of the 3 core assets. For example, MIIF unitholders will only benefit if TBC value appreciated or its distribution increased and this rest upon TBC Management's ability to grow its business and market share in the long run. In other words, value isn't being created by MIMAL directly anymore since they don't run it directly (though they sit on the Board). How the Management of TBC, CXP and HNE fares operationally will determine the Fund's fate.

Previously, I would be more concerned with the Management ability to buy low sell high or finding opportunities in distressed markets or using debt to buy new investments or making opportunistic bets etc. But these days, I would be more concerned about how is TBC performing or how is the traffic volume in HNE etc since these assets are funding the dividends. Hence, I would say that MIIF value rest on the underlying assets and their future prospects as opposed to MIMAL's ability to under-take active portfolio management (like in the past).
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
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RE: Macquarie International Infrastructure Fund - by Nick - 16-10-2011, 10:19 PM

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