In August after you heard about the Morandi Bridge in Genoa, Italy falling down, hopefully you were concerned about the people first. Later, you started to piece more details of the design and maintenance issues and possible weather related issues. Now days we ask was the road a toll road and who owned it – the country or a company? According to Ilaria Polleschi of Reuters, in terms of the road, a company called Autostrade per l’Italia which is a subsidy of Atlantia which is controlled by holding company for the Benetton family, who are famous for the clothing company. The shares of Atlantia went down 30% because of the bridge collapse.
The Italian government expecting the company not have maintaining the bridge as much as possible, not wishes to pass a law to invest more of the profits of operating the infrastructure to maintenance and safety. It is even thinking about taking away the ability for Atlantia to operate, however if they do there is a compensation clause to be paid for the investments the firm has done.
The bridge collapse raises the questions of private control of public assets and should there be more or less. Governments typically are in deficit positions and some institutions welcome the opportunity to invest in toll roads. Both directly and in joint ventures with the government agencies. Over the past few years, billions of dollars have and continue to go into public assets with tolls. With a monopoly on the road, the institutions can project traffic volumes and profitability.
Linking to dividend paying stocks, when you buy these companies and some have been very profitable in terms of volumes and rising asset prices, ask what happens when something goes wrong. How is the company protected, because the reality is without the public private partnerships, large aspects of infrastructure would not get done on a timely basis. If the company is protected well, continue to invest your money.
There are more questions than answers, till the next time – to raising questions.