FirstGroup cash call shows deleveraging imperative 20 May 2013 The rail and bus operator is raising $1 bln to stave off a ratings downgrade. The chairman is leaving. Debt may be cheap, but too much is still a constraint. With equity markets rising, this won’t be the last over-geared firm to seek to restructure its balance sheet.
China rail reform skirts big question: who pays 20 Mar 2013 Building high-speed railways makes sense. Burdening the new operator with $420 billion of debt doesn’t. Passengers aren’t rich enough to bear the investment costs. Yet with some creative financing, it’s possible to tap those who benefit most: industry and local governments.
China’s pick-up is a tale of three engines 5 Dec 2012 Breakingviews’ China Tea Leaf Index shows the economy regaining traction. But not all growth is equally good, and not all the moving parts are yet running as they should. Yet more real estate investment and higher Audi sales suggest China’s bad habits are proving hard to kick.
Megastorm shows scope for U.S. infrastructure bank 31 Oct 2012 Any traveler knows America’s transport network is dilapidated. Now, devastation on the East Coast has underscored the lack of investment in defenses. Despite tight budgets, the world’s richest economy could afford more. A quasi-bank could provide the best bang for federal bucks.
UK needs to put outsourcing on new rails 3 Oct 2012 The British government has reacted with alacrity to the discovery of errors in the way it awarded the 6 bln stg West Coast rail franchise. But without serious assurance that the system can work better, private providers of state-sponsored services could start jacking up prices.
Chinese sightseers present challenge to the world 3 Oct 2012 Half the country’s 1.4 billion inhabitants are expected to travel during this week’s national holiday. A new love for tourism provides a much-needed economic boost. But giant traffic jams and a deadly boat crash in Hong Kong underscore the difficulty of coping with the crowds.
What else could Manmohan Singh reform? 17 Sep 2012 India’s prime minister has unleashed three bold economic reforms. Assuming his nerve holds in the face of strong protests, he may even get a taste for such announcements. India’s financial sector, mining industry and labour market would all benefit from a similar approach.
Italians railroad China’s PLA on soccer pitch 2 Aug 2012 How else to explain an investment in Inter Milan by China Railway Construction, a state group with origins in the People’s Liberation Army? Bragging rights are limited and industrial rationale non-existent. At best it’s a quid pro quo for the contract to build Inter’s new stadium.
JLR flotation would make sense for Tata Motors 15 Feb 2012 Jaguar Land Rover contributed 95 percent of the combined group’s profits last quarter. A minority listing of the UK firm would let Tata book a healthy return on its $2.3 bln purchase, and allow JLR to raise cheap capital overseas. There’s no need to keep this gem hidden.
Canuck railroad could gain from dose of Ackman 11 Jan 2012 A key measure of productivity puts Canadian Pacific dead last among North America’s big six railways. Even if a proxy fight being waged by Ackman’s Pershing Square fund isn’t successful, it could inject some healthy ambition in the company’s turnaround plan.
Fast-train UK hopes for some Olympic speed 10 Jan 2012 The decision to go ahead with the new high-speed rail shows the UK government is on the right track. It has been cutting its over-large public sector but wants to invest for long-term growth. Some added pace from the Olympics and the Queen’s jubilee should help this year.
China’s super-railways on track for debt troubles 15 Aug 2011 New super-fast railways would struggle to repay their colossal borrowings even before new safety fears, which will push costs up and demand down. The country benefits, since the perks of fast trains aren’t all financial. Not so investors in banks who fund these trophy projects.
China’s train crash sets new tests for freedoms 3 Aug 2011 Authorities’ attempt to censor coverage of China’s rail tragedy has backfired. Even official media defied orders or found ways to circumvent the ban. If Beijing now clamps down harder, the impact will be economic as much as social.
Train crash highlights Chinese hard landing risks 25 Jul 2011 The highspeed train tragedy shows when things fail to slow down properly in China, they crash. Highspeed rail is a typical symptom of China's investmentled growth models: wasteful, hazardous and unsustainable. A badly handled accident can trigger political tensions.
Descent of MAN shows failings of German M&A rules 5 Jul 2011 Outside shareholders have lost control of the truck maker without receiving a premium. Investors did not have to accept VW's clever lowball bid. But lax German takeover rules tilted the field against them. It's another reminder that the dysfunctional regime needs to change.
Where is MAN’s defence against VW? 27 Jun 2011 The German truckmaker has mounted almost no resistance to VW's attempt to take effective control without paying a premium. Sure, Germany's lax takeover regime makes VW's assault hard to repel. But MAN's management could have done more to help investors push up the price.
Indonesia’s economy chugs towards gridlock 23 Jun 2011 Investors have fallen for Indonesia's resourcesled transformation. But the country is rapidly outgrowing its highways, ports and power grid. The problem isn't financing but a parliament paralysed by corruption allegations. At this rate, the growth story could come under strain.
Dollar Thrifty rivals drive too hard a bargain 9 May 2011 Hertz pulled a Uturn by returning with a hostile $2.2 bln bid to challenge the stalled Avis proposal. But when considering Dollar Thrifty's improved performance and deal synergies, the sweetened offer still looks too low. Either Avis or Hertz needs to step up with more money.
China’s truckers sound bum note on reforms 26 Apr 2011 Sure, fuel price hikes and high fees penalise the truck drivers who staged last week's strikes. But pricier petrol is essential for a more balanced, less polluted China. If the authorities are too wary of upsetting vested interests, necessary reforms will be stifled.
IPO hopefuls want to sit around OpenTable 7 Apr 2011 The backers of nearly every company to market with an Internet angle Zipcar, Pandora, Zillow are conjuring comparisons to the restaurant reservation site whose shares have quintupled since their debut. While similarities exist, none have OpenTable's moat or network effect.