Home' Navy News : March 29th 2012 Contents One of the many ways to
invest money is in infra-
structure such as roads, rail-
ways or airports. But before
ou do, make sure that the investment
suits your goals and you understand
ASIC has released benchmarks to
improve the disclosure of information
to investors by infrastructure entities
about important aspects of the invest-
ment, such as payment obligations
and financial forecasts.
With infrastructure investments,
you put money into a single infrastruc-
ture asset or multiple infrastructure
assets, such as the building and man-
agement of toll roads, telecommunica-
tions facilities and gas pipelines. Your
money is channelled into these assets
through infrastructure entities.
Be wary if you are investing in infrastructure,
says Australian Securities and Investment
Commission chairman Greg Medcraft.
Investing in infrastructure
Before you invest in infrastructure
assets, you should be aware how they
differ from other long-term invest-
ments, such as shares.
Some key features of infrastructure
Infrastructure entities might have
a contractual right to operate an
infrastructure asset for a set time
period, rather than buying the asset
Some infrastructure entities own
less than 100 per cent of their infra-
structure assets, which affects their
control over their assets.
Infrastructure entities often rely
on forecasts of the future use of an
asset. If the assumptions behind
these forecasts prove incorrect,
the value of the investment may
The construction and development
of infrastructure assets can take
many years. It may take a long time
for the investment to generate cash
As infrastructure projects are often
unique, it can be difficult to com-
pare one with another. This can
also make your investment difficult
Certain types of infrastructure are
subject to government regulation.
For example, the prices that some
entities can charge are set by the
Before investing in infrastructure
make sure you understand the risks.
This means reading all disclosure doc-
uments carefully. ASIC's benchmarks
for infrastructure entities outline the
key information the company should
disclose to you so you can assess
These benchmarks relate to impor-
tant aspects of the investment, for
Corporate management: Is the
structure designed to maximise
returns to investors, or to the entity
or its operators? Are payments to
management linked to the perfor-
mance of the entity?
Forecasts: Are the entity's cash
flow forecasts checked by the
directors and auditors? Does the
entity disclose any forecasts fol-
lowing acquisition or development
of an asset?
Payment obligations: Are your
units or shares fully paid, or could
you owe money later? Are all units
or shares treated equally -- for exam-
ple, do all investors have the same
rights? If the entity is a unit trust,
where is the money you are paid
coming from and is this sustainable?
No one can guarantee how an
asset will perform and you might
lose some or all of your money if
something goes wrong.
Always make sure your invest-
ment strategy is well diversified.
For more information, see ASIC's new
guide, Investing in infrastructure?,
which is available from www.
Email ASIC at ADFcolumn@asic.gov.au with topics that interest you
March 29, 2012
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