Macquarie's bottom line grows with toll roads

| 11/27/2006

Although recent reports are casting doubt that the toll road investments of Macquarie Infrastructure Group of Australia are guaranteed to be a raging long-term success, current profits are another story. It is no surprise that the self-proclaimed world's largest infrastructure investor is currently increasing its bottom line through investments that include U.S. toll roads.

Shelling out billions of dollars in the last two years to lease the Chicago Skyway for $1.83 billion and the Indiana Toll Road for $3.85 billion had Macquarie investors up in arms and low on dividends, but the company has bounced back in recent months according to The Australian newspaper.

Shares in Macquarie Infrastructure Group rose from $2.61 (Australian dollars) in July to a recent mark of $3.68, The Australian reported.

Making shareholders money is part of what the parent company, Macquarie Bank, is all about, despite one Australian professor's study that shows the investor is not as stable as it is reported to be.

A report of nearly $600 million in profits being reported in the last six months was released earlier in November, about the same time as an academic report from John Goldberg of Sydney showed that the investor's financing methods relied on shifting debts from one category to another to please shareholders.

But even with that going on, Macquarie is reportedly interested in a long-term lease of the New Jersey Turnpike and Pennsylvania Turnpike, should deals for privatization become available.

"We think the U.S. is going to be the biggest market for what we do," CEO Stephen Allen said, quoted in The Australian.

Macquarie conducted a feasibility study for the New Jersey Turnpike, valuing a private lease at about $20 billion.

Security holders with Macquarie Infrastructure Group recently approved the sale of 50-percent assets in the Chicago Skyway, Indiana Toll Road, Dulles Greenway in Virginia and South Bay Expressway in San Diego to Macquarie Infrastructure Partners - a U.S.-based publicly traded firm in New York.

The sale of assets to a U.S.-based firm helps the company "Americanize" according to Allen in previous press reports, to get away from the stigma attached to "foreign investor."

The company is waiting to see whether the Pennsylvania Turnpike, New Jersey Turnpike, Garden State Expressway and/or the Atlantic City Expressway become available for bidding and an eventual private lease.

Other investment groups like Goldman Sachs, the Carlyle Group, Credit Suisse, General Electric and UBS are also reportedly interested in the U.S. toll-road market, The Australian reported, and Land Line reported last year that a Spanish-Italian investor called Abertis is also interested in U.S. toll roads.