No. of Recommendations: 2
Saw this on SA. Seems to refute bear case?
KingXIV
Let me share another set of interesting discrepancies, which also support my view that BIP's Partnership Capital number is not meant to be a marked to market value of its net assets.
I will refer to the Schedule of Investments table in Appendix 4 of your report, which list the carrying values of each individual assets, as marked by BIP. (Keith, great work by the way! I printed your table out to help my own research)
A number of large investments show up with carrying values that don't pass the smell test.
I am not saying that my numbers (mainly historical purchase costs, recent rumor price tags) are better indictors of current value, but they differ so much from the "carrying values" that either something very bad is wrong with an asset, or the "carrying values" are not meant to be used for fair value/ MTM purposes.
NTS (Brazil pipeline): 31% carried at $119 million, implying a total equity value for NTS of $384 million.
Brookfield purchased 90% of NTS for $5.2 billion (likely debt free) in 2016, and was rumored recently to be shopping it around for between $4.7 and 5.7 billion (100% EV).
Local norm dictates that this asset is not highly levered, so it's unlikely that equity value is below $3 billion.
Pipeline Infrastructure (Indian gas transmission): 21% carried at $17 million, implying $81 million in total equity value.
Brookfield purchased the East West Pipeline for $1.9 billion (enterprise value) in 2019.
I can't find any news that may suggest this asset is in such great trouble that the equity value should be written down to merely $81 million. Again, as in Brazil, it's hard to lever the asset up to levels commonly seen in the developed markets.
UK residential infrastructure (I believe it is for HomeServe, not the tiny company BOXT): 15% carried at $17 million, implying $113 million in total equity value.
Brookfield bought HomeServe in 2022 for $5 billion EV. In early 2022, it acquired a majority stake in BOXT for GBP 20 million.
UK ports (PD ports): 59% carried at $189 million, implying $320 million in total equity value.
Brookfield was hoping to get GBP 2 billion for this asset back in 2021, and the local Mayor of Tees Valley was trying to bid GBP 1.1-1.4 billion (and rejected by Brookfield).
