Wednesday, March 29, 2006

Toll Taking

Bloody hell, three posts in one day. And a picture of a Republican, in this case, Governor Daniels of Indiana. But this post is necessary. Here's the normally able Dan Gross discussing the Indiana Toll Road sale, and its precedents, in Slate. "The foolish plan to sell American toll roads to foreign companies", goes the subhed. True, Dan, that the long-term leasing of a toll road is, to all intents and purposes, a one-shot deal. The assumption here, though, is that private companies are better at running these assets than state governments, and there's mounting evidence that this is the case. The rest of their advantage comes down to financing prowess, and here I must remain discreetly silent, and cite conflicts with the day job.

Dan, however, does posit a theory in a sidebar, that foreign firms are all over these assets because US private equity firms are turning their noses up at them. It's not a theory that holds up much, if only because many US asset managers, investment banks, and even the Carlyle Group are indeed looking at just these assets, and US institutions are big investors in Macquarie's funds. Many of them would be quite happy with 12% returns, since they'll be looking at a spectrum of risk-reward balances. The honest truth is that European companies have 10-20 years' experience with operating toll roads. US ones have very little. Sorry about that.

Still, if that isn't an excuse to post a Kill Henry Sugar song, I don't know what is:

Kill Henry Sugar - "Indiana"
Buy "Popular Music For Today's Active Lifestyles" here. Or go to one of their gigs and ask them really nicely. They're pussycats.


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