Home' Future Building Australian Infrastructure Review : Volume 3 Number 1 Contents 10 futurebuilding Volume 3 Number 1
What parts of your infrastructure
business are most active?
The business is evenly busy between
economic and social infrastructure such
as hospitals. Over the past year we've
been busy in public private partnerships
but we've also done financing in the
toll roads, airports and ports space.
The Bank also increased its presence
in the resources infrastructure space
through its financing of the Abbot Point
Coal Terminal (which was acquired by
India's Adani Group for $1.8 billion
during Queensland's recent sale of key
How does activity in Australia
stack up against opportunities
Since the early 1980s CBA has had a
specialised Infrastructure unit. We have
a leading position in the Australian
market. When it comes to growth
opportunities we see them overseas,
particularly in the United Kingdom
and Europe. One of the consequences
of the financial crisis in Europe is that
a number of European banks have
perhaps pulled back their appetite.
CBA is a well-funded, strong institution.
We're in a good position to make the
most of that situation.
Can you give us some examples?
We recognise infrastructure is a global
business. We've made a concerted
effort to reach out to overseas clients
and capital markets, such as with
Anglian Water for example. Anglian is
a water utility in the United Kingdom.
We, as an Australian bank, on a sole
basis undertook a $US550 million
raising in the United States private
placement market for Anglian Water.
That's an Aussie bank, taking a United
Kingdom client to a United States
capital market. It doesn't get more
global than that.
What are Australia's infrastructure
priorities as CBA sees them?
Each State has infrastructure priorities.
In the key capital cities -- Sydney and
Melbourne -- the main priorities are the
transport network for both private travel
and freight. Sydney is a good example.
The port and airport are close together.
That's great, but the road network
servicing them at the precinct is very
poor and congested. This is a priority for
New South Wales.
How are you active in tapping into
those infrastructure priorities?
We have good relations with
government and private sector. It's
about being tapped into the market to
know what projects are coming. We
can play in this space on many different
levels. This bank was one of the original
owners of a key piece of infrastructure:
the M5 motorway in Sydney. It's also
been a shareholder in airports: Brisbane
Airport when that was privatised. So
this bank has a long history of not only
being a financier but also an equity
What role will PPPs play when it
comes to planning infrastructure?
PPPs have delivered high-quality
projects to tax payers. Where the private
sector has made the wrong call; it has
been on patronage risk. The failed
projects have stopped the private sector
from investing in greenfield toll road
projects for example. We believe there
is a model of successful participation
for the private sector, but what that
requires is a level of support from
government to perhaps share patronage
risk, particularly in the early years of
the project. We also believe that if the
government is going to share in the
downside, it needs to benefit from the
How does the future look for you
in this business?
We are very skilled at what we do.
We take calculated risks. Our growth
strategy is led by what we are good
at. We have a disciplined approach to
growth. We see a healthy pipeline of
transactions in the sector. Population
growth, urbanisation and ageing of
existing infrastructure assets are driving
the demand for new infrastructure.
Budget and taxation restraints are
increasing the gap between required
infrastructure and the capacity public
sector finance. Public sector constraints
will mean that we will also see an
increased level of asset sales by
governments. In the past 18 months
we have seen the sale of two ports,
a rail business and most recently a
desalination plant. Finally, in Australia,
there will be increasing opportunities to
finance common user infrastructure that
services the mining sector.
The Commonwealth Bank of
Australia is leaning on in-house
expertise and hefty capital reserves
to build on its infrastructure
business as European debt woes
prompt overseas rivals to scale back
In 2011 Commonwealth Bank
was a mandated lead arranger for
loans totalling US$16.2 billion.
Milka McNamara, CBA's Head of
Infrastructure, Institutional Banking
and Markets tells us about the
bank's priorities in the segment and
where it sees growth in the coming
HELPING BUILD AUSTRALIA'S
Links Archive December 2011 Volume 3 Number 2 Navigation Previous Page Next Page