|
Laxman Pai, Opalesque Asia: COVID-19 is having a severe impact on short-term cash flows for toll-based infrastructures, such as toll roads, airports, and railways/rolling stock, where the assets generate earnings by charging for use, said a study.
According to a Preqin study, sectors like airlines and privatized rail are seeking government bailouts.
For example, as part of the US's $2tn economic relief package, the federal government will offer almost $60bn in loans and grants to air carriers and may hold an equity stake until the loans are repaid.
"Given the sector's challenging economy, we expect to see fewer deals in this space," the report said.
In natural resources, the conventional energy sector is likely to be especially hard hit as oil prices plunge in response to falling demand. Indeed, more than a quarter (28%) of investors Preqin surveyed said they plan to avoid conventional energy-focused natural resources in 2020 because of COVID-19. Weak investor demand could weigh on fundraising for such funds.
"In contrast, as COVID-19 heightens awareness of the need for investment in social infrastructure such as hospitals, we expect to see increasing activity in this sector," the report said.
Privately held businesses offering essential services such as utilities - which benefit from long-term contracts with customers - should be better positioned to withstand the impact of COVID-19, though highly leveraged companies may come under sc...................... To view our full article Click here
|
RSS
