Michael Pascoe writes:

Markets sometimes worry about the prices Macquarie Bank is prepared to pay for infrastructure plays just in case it one day makes a multi-billion-dollar miscalculation. The corollary of that is respect when MacBank underbids on a deal that it thinks is too expensive – as was the case with Sydney’s vexed Cross City Tunnel, the one that’s now seeking hundreds of millions of dollars compensation from the NSW government.

Thus Westpac’s reported success in out-bidding MacBank for the “ghost train”, the Sydney Airport rail link, could cause a little analyst head scratching.

The original operator went into receivership six months after the link opened in 2000. It was a piece of transport infrastructure rushed into service ahead of the Olympics. Now the SMH reports Westpac trumped the Millionaire Factory to sign a conditional contract to buy the loss-making 10km line and four stations, two of which are at the airport.

Aside from thinking that Macquarie (as the mob that extorts, er, correction, runs the airport) might be in the best position to maximise the value of the rail link, it seems an unusual risk for Westpac when it’s prided itself on being cautious during Australia’s lending spree over the past few years. Westpac has lost market share in key areas rather than compete with the other banks throwing money at anyone who asks for it.

So, could this be a sign Westpac is prepared to start taking on riskier business to catch up with the rest? All aboard the infrastructure express as a rather late ticket buyer. At least there’s not much traffic on the line to cause delays.

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Peter Fray
Peter Fray
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