Dissertation Writing Help -Gammon India SWOT Analysis Strategic Management
SWOT Analysis Report on
Gammon India-Dissertation Help in Strategic Management
SWOT Analysis of Gammon India-
Dissertation Outline for Strategic Management Topic
Strengths
■ Gammon
is well placed within the Indian infrastructure sector, meaning it can take
advantage of opportunities as they arise.
• Gammon has a
presence in the infrastructure sectors in Asia, the Middle East and Africa.
Weaknesses
■ It was hit by
higher finance costs and currency fluctuations, dampening Q109/10 results.
Opportunities
■ India's strong
population growth and a growing economy is fuelling demand for infrastructure.
■ India's
government is looking to improve the regulatory regime to make the business
environment more attractive for private sector companies looking to invest in
infrastructure. It is also opening up the sector to private companies through
public private partnership (PPPs).
Threats
■ Lack
of widely available domestic expertise to take on large infrastructure and
civil engineering projects.
Infrastructure
fund raising has soared in recent years as investors took heed of the asset
class' long term benefits. The primary factor that has fuelled the momentum and
galvanised interest from the cash-rich pension fund community into
infrastructure were the low yields on offer in traditional safe-havens, such as
US treasuries. We have been following the trend as new institutional investors
came into the market. With yields now rising -especially in the long term end
of the curve- we explore what the outlook is for infrastructure investments in
a rising yield environment.
Our assessment
is that, while the diversification of institutional investors' portfolios into
infrastructure (inter alia) was certainly galvanized by the persistently
low yields of Treasuries and successive rounds of quantitative easing, the rise
in yields will not change this trend, though it could decelerate it. We
consider three factors behind this view.
■ Firstly,
the share of infrastructure assets in portfolios of major pension funds
remains low, therefore there is no major opportunity cost associated with
keeping capital within infrastructure funds.
■ Secondly,
infrastructure remains a good match for the maturities of liabilities
especially of pension funds, therefore the underlying merits of such an
investment strategy are firmly established.
■ Thirdly,
while tapering talk in the US has fuelled the rise in long term Treasury
yields, the aggressive monetary easing in Japan has opened up the prospect
of fresh funds flowing into infrastructure (either directly via equity or
funds) from Japanese investors who are wary of a new risk environment in
the domestic bond market. The US$100bn Japan Pension Fund Association is
already spearheading this with one investment nearly completed in the Midland
Cogeneration Venture in Michigan and plans to invest up to US$1.5bn in
Australia, the US and Europe.
The main risk we
see associated with rising yields is related to the opportunity cost of long
term infrastructure projects. With the US Treasury yield curve becoming
steeper, the net present value of projects will edge downward, deterring long
term investments to the benefit of short-term projects. This could be manifested
in lengthier timeframes for project financing to be finalised for larger
projects. It could also accelerate a trend we have seen associated with the
rise of institutional investors and pension funds in the market and the
reduction in appetite to go through funds of funds - therefore prompting a reduction
in fund raising.
While
infrastructure fundraising has been reaching new highs, this is due to a few
major funds concentrating the majority of capital following large scale
fundraising. Global Infrastructure Partners (GIP) significantly
bolstered the 2012 infrastructure funds market with their second fund that
raised US$8.25bn in Q4 2012. According to data by Preqin, unlisted
infrastructure funds have secured US$14.5bn in new commitments in the first half
of 2013, nearly 80% higher than the same period the year before. About 40% of
the total raised so far this year. However, it is noteworthy that while the
fundraising activity is higher compared to last year, there are still 144
unlisted funds looking to raise a total of US$93bn by the end of this year;
nearly impossible in our view, and suggesting that not only is competition
high, but also that compared to expectations, what has been raised thus far is
about 15% of the target.
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