INFRASTRUCTURE INVESTING IN U.S.
CONTENTS <ul><li>U.S. Infrastructure …………………………………………………… 3 </li></ul><ul><ul><li>Investment Factors ………………………………………….… 4 ...
U.S. INFRASTRUCTURE <ul><li>Infrastructure has always been a sector of interest for investors for its stable and long-term...
INVESTMENT FACTORS <ul><li>Opportunities  </li></ul><ul><li>available for disciplined </li></ul><ul><li>and savvy investor...
GOVERNMENT STIMULUS PACKAGE   <ul><li>As part of the American Recovery & Reinvestment Act (ARRA), $80 billion has been all...
PUBLIC-PRIVATE PARTNERSHIPS <ul><li>PPPs have the greatest potential to tap private capital </li></ul>$2.2 trillion   Esti...
PUBLIC-PRIVATE PARTNERSHIPS <ul><li>The 2010 budget provides a National Infrastructure Bank to expand public-private spend...
OUTLOOK BY SECTOR Source: Frost & Sullivan Research
WHY RAIL ? <ul><li>Rail infrastructure projects tend to be of higher value and longer term than other infrastructure proje...
RAIL SECTOR POTENTIAL <ul><li>High Speed Rail </li></ul><ul><ul><li>$8-billion down payment allotted by the current admini...
FREIGHT RAIL INDUSTRY <ul><li>Moves more than 40 percent of the United States’ freight, coal being the single most importa...
COMPARATIVE STUDY OF FIRMS <ul><li>Genesee Wyoming, Inc. owns and operates short line and regional freight railroads in No...
Genesse & Wyoming, Inc. American Railcar Industries Greenbrier Companies FreightCar America Stock Industry S&P Source: Mor...
CONCLUSION <ul><li>The U.S. infrastructure sector provides a huge opportunity for investors on a long term basis </li></ul...
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U.S. Infrastructure

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Scope of investing in the US Infra sector with focus on rail industry.

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U.S. Infrastructure

  1. 1. INFRASTRUCTURE INVESTING IN U.S.
  2. 2. CONTENTS <ul><li>U.S. Infrastructure …………………………………………………… 3 </li></ul><ul><ul><li>Investment Factors ………………………………………….… 4 </li></ul></ul><ul><ul><li>Government Stimulus Package ………………………….. 5 </li></ul></ul><ul><ul><li>Public-Private Partnerships (PPPs) …………….………. 6 </li></ul></ul><ul><li>Sector Outlook ………………………………………………………… 8 </li></ul><ul><li>Rail Sector .………………………………………………………………. 9 </li></ul><ul><ul><li>Potential ………………………………………………………….... 10 </li></ul></ul><ul><ul><li>Freight Rail Industry …………………………………………… 11 </li></ul></ul><ul><ul><li>Comparative Study of Companies ………………………. 12 </li></ul></ul><ul><li>Conclusion …………………………………………………………….... 14 </li></ul>
  3. 3. U.S. INFRASTRUCTURE <ul><li>Infrastructure has always been a sector of interest for investors for its stable and long-term returns </li></ul><ul><li>As the U.S. economy comes out of recession, infrastructure is the core sector that would drive future growth </li></ul>Source: IHS Global Insight
  4. 4. INVESTMENT FACTORS <ul><li>Opportunities </li></ul><ul><li>available for disciplined </li></ul><ul><li>and savvy investors </li></ul><ul><li>Increased ROI due to </li></ul><ul><li>price moderation </li></ul><ul><li>Less leverage available </li></ul><ul><li>US Government fiscal </li></ul><ul><li>budget shortfalls are </li></ul><ul><li>apparent </li></ul><ul><li>Budget shortfalls and </li></ul><ul><li>awareness of failing </li></ul><ul><li>infrastructure leads to </li></ul><ul><li>more Private–Public </li></ul><ul><li>Partnership opportunities </li></ul><ul><li>Obama administration is </li></ul><ul><li>focused on infrastructure </li></ul><ul><li>and clean energy </li></ul><ul><li>Independence of </li></ul><ul><li>infrastructure assets </li></ul><ul><li>from business cycle </li></ul><ul><li>risk – relatively </li></ul><ul><li>recession resistant </li></ul><ul><li>Tangible real assets </li></ul><ul><li>are more attractive if </li></ul><ul><li>global stimulus leads </li></ul><ul><li>to inflation </li></ul>Credit Crisis Factors Political Factors Economic Factors
  5. 5. GOVERNMENT STIMULUS PACKAGE <ul><li>As part of the American Recovery & Reinvestment Act (ARRA), $80 billion has been allotted to infrastructure development </li></ul><ul><li>A total of $51 billion would be invested in the core infrastructure sector that includes roads, bridges, railways, sewer and other transportation </li></ul><ul><li>Emphasis on new technology and green infrastructure </li></ul>Source: U.S. Government Data
  6. 6. PUBLIC-PRIVATE PARTNERSHIPS <ul><li>PPPs have the greatest potential to tap private capital </li></ul>$2.2 trillion Estimated amount needed for US infrastructure improvements in the next 5 years $975 billion US Government funding for Infrastructure needs $1.2 trillion Significant gap in funding Public-Private Partnerships (PPPs)
  7. 7. PUBLIC-PRIVATE PARTNERSHIPS <ul><li>The 2010 budget provides a National Infrastructure Bank to expand public-private spending. Initial funding is expected to be $5 billion and increase to $25 billion by 2019. </li></ul><ul><li>Over half of US states have legislation authorizing PPPs transaction for </li></ul><ul><ul><li>Long term leasing of existing infrastructure </li></ul></ul><ul><ul><li>New development of transportation infrastructure </li></ul></ul><ul><li>Successful PPPs </li></ul><ul><ul><li>In March 2009, Florida closed a $1.6 billion concession to develop toll lanes on I-595 with Madrid based ACS Infrastructure Development </li></ul></ul><ul><ul><li>In 2006, leasing of 75 years old Indiana toll road for $3.8 billion to State Mobility Partners and Macquarie Infrastructure Partners </li></ul></ul>
  8. 8. OUTLOOK BY SECTOR Source: Frost & Sullivan Research
  9. 9. WHY RAIL ? <ul><li>Rail infrastructure projects tend to be of higher value and longer term than other infrastructure projects </li></ul><ul><li>Rail construction growth is expected to recover in 2010 and 2011 with growth rates of 1.7% and 1.2%, respectively </li></ul><ul><li>Big focus on environmental friendliness in the Stimulus Package </li></ul>
  10. 10. RAIL SECTOR POTENTIAL <ul><li>High Speed Rail </li></ul><ul><ul><li>$8-billion down payment allotted by the current administration for the development of a high speed rail system </li></ul></ul><ul><ul><li>Highly viable due to reduced traffic congestion and more efficient commutation in metropolitan areas </li></ul></ul><ul><li>Major investment in the rail sector is a good indicator </li></ul><ul><ul><li>Warren Buffet acquired the North Burlington Santa Fe Railroad company for $32 billion in Nov. 2009 </li></ul></ul><ul><ul><li>Benefits expected from the Asian demand for coal from North America </li></ul></ul><ul><ul><li>Higher fuel prices are more detrimental to trucking industry than rail </li></ul></ul><ul><ul><li>Pressure mounting on railroads and shippers to replace aging units </li></ul></ul>
  11. 11. FREIGHT RAIL INDUSTRY <ul><li>Moves more than 40 percent of the United States’ freight, coal being the single most important commodity that accounts for half of the electricity generated in the country </li></ul><ul><li>Rail is 2-5 times more fuel efficient than trucks and offers higher cost effectiveness </li></ul><ul><li>Rail Intermodal services have tripled over the last 25 years due to logistical efficiency. Accounts for 22% of rail revenue </li></ul>Source: Association of American Railroads (AAR) ’ 64 ’68 '71 '74 '77 '80 '83 '86 '89 '92 '95 '98 '01 '04 '07 Productivity Volume Revenues Rates 300 250 200 150 100 50 U.S. FREIGHT RAILROAD PERFORMANCE Staggers’ Act Passed Oct. 1980 allowing Railroads to reinvest billions of dollars into the system
  12. 12. COMPARATIVE STUDY OF FIRMS <ul><li>Genesee Wyoming, Inc. owns and operates short line and regional freight railroads in North America, Australia, Bolivia, and the Netherlands. </li></ul><ul><ul><li>5 year growth is forecasted at 22.7% as compared to industry growth of 13.2% </li></ul></ul><ul><ul><li>Proven ability to make strategic acquisitions – 5 acquisitions in 2008 for $370 million </li></ul></ul><ul><ul><li>Worked on more than 70 projects since 2001 with a total value of $8.1 billion </li></ul></ul>Source: Company Reports 0.62 1.32 3.9% 7.7% (76.8)% Freightcar America 1.90 (3.20) (4.7)% (24.4)% (36.1)% Greenbrier Companies 0.82 0.59 1.8% 3.9% (64.1)% American Railcar Industries 0.64 1.81 4.6% 11.9% (14.4)% Genesee & Wyoming Inc. Debt to Equity EPS ROA ROE Revenue Growth As of Sept 2009 (TTM)
  13. 13. Genesse & Wyoming, Inc. American Railcar Industries Greenbrier Companies FreightCar America Stock Industry S&P Source: Morningstar
  14. 14. CONCLUSION <ul><li>The U.S. infrastructure sector provides a huge opportunity for investors on a long term basis </li></ul><ul><li>Government’s commitment to infrastructure development through the Stimulus Package would create a market for projects and prospective growth of infrastructure companies </li></ul><ul><li>Recent big investments in the U.S. rail industry and the construction of high speed railways indicate a bright outlook </li></ul><ul><li>Compared to its peers in the mid segment railroad business, Genesee & Wyoming has healthy financials and a scope for potential investment </li></ul>

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