Tuesday, 28 May 2013

You might not be interested at first, but . . .

M&A is not dead as Valeant's, agreed takeover $8.7bn purchase of Bausch & Lomb shows. The contact lens group has built a solid income stream from the disposable lens business. The reason why this attracted me attention is that Valeant had previously made a bid for Actavis who just last week made a bid for Warner Chilcott. That makes the pharmaceutical space clearly in play for bankers and with Pfizer looking to divest itself of Zoetis (which is veterinary orientated) makes it interesting to all investors. The next step for me is to look at the financing of these deals as I suspect at some stage the bond market will make terms more difficult. That of course has all sorts of ramifications for the broader market.

Along the same lines has been recent activity by the Crown Estate (UK). For those who don't know the Crown Estate represents the properties held by the UK formerly owned by the royal family. The Queen (i.e. the Crown) is the nominal owner, but swaps the outright ownership for a 15% cut of revenues in a deal that was revamp from the original George III era Act in 2011. The CE is taking a leaf out of the playbook of that other venerable UK institution the Duke of Westminster's Grosvenor Estate which has spent the last 10 years broadening and revamping it's portfolio of properties both in London and globally. The CE has struck a £320m deal with Ontario Municipal Employees Retirement System on a 270,000 sq ft development of shops, restaurants and offices in St James’s. One thing I didn't know was that the CE is not allowed to go into debt, therefore has to adopt a partnership system to finance redevelopment. My own interest in this deal goes back to the divestment of UK £5bn property portfolio held by Commerzbank that I have been watching closely. The costs and structure of the CE deal will hold a lot of information regarding valutaion of the Commerzbank portfolio and needs to be watched closely by investors. My own view remains that Sterling is underpriced and therefore UK cashflows could be somewhat of a bargain still. This is an interesting space for those wishing to diversify.

Sometimes property comes from unusual places. Singapore Press Holdings (SPH) is planning to raise about S$540 million ($427 million) from the initial share sale of a real estate investment trust that will include Paragon and the Clementi Mall in the island state’s western suburb.

As a former resident of Singapore I know these properties. I'm not as bullish about buying REITs from the Singaporeans as they usually are quite canny about the pricing of home assets. Having said that it, like the London deals will be heavily monitored to assess valuations for a number of properties likely to also come to the market. Investors may be best advised to look on rather than participate.

Now that the 2013 Giro is over we can look forward to the traditional lead-ups to the TdF. The primary focus will be on the  Critérium du Dauphiné. I know many of the towns and hills at the tail end of the CdD from my time in Geneva, many of which are truly beautiful. The route this year comprises:

Sunday 2nd June, stage 1: Champéry-Champéry, 121 km
Monday 3rd June, stage 2: Châtel - Oyonnax, 183 km
Tuesday 4th June, stage 3: Ambérieu-en-Bugey - Tarare, 164 km
Wednesday 5th June, stage 4: Villars-les-Dombes – Parc des Oiseaux, 32.5 km (individual time-trial).
Thursday 6thJune, stage 5: Grésy-sur-Aix - Valmorel, 139 km
Friday 7th June, stage 6: La Léchère - Grenoble, 141.5 km
Saturday 8th June, stage 7: Le Pont-de-Claix - Superdévoluy, 184 km
Sunday 9th June, stage 8: Sisteron -Risoul, 152 km

The Chatel to Oynnax leg interests me most as they are the roads I'm most familiar with. I'm hoping to get the strava tracks to see specifically what segments I might have actually ridden. It's always nice to think you've done something that the pros are going to ride. It should be a great week with the main question being what condition the Sky / Froome team is in ahead of the TdF. As an aside the course takes in some nice real estate, though I doubt we'll get much information regarding current valuations during the broadcasts.


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