UncleLongHair

Shorting Chilean ETF: Energy Crisis 'Confirmed'

Brookfield Asset Management (BAM) recently spun off a partnership named Brookfield Infrastructure Partners (BIP) which in turn owns Transelec, the private electricity distribution company that distributes electricity to 99% of the Chilean population. This is one of the primary two assets they were seeded with when spun off.

Transelec's revenues are indexed to inflation (which in Chile was 4.4% in 2007), and they also get a 9-10% unlevered return on invested capital for improvements. Given the dire state of the electricial infrastructure, such cap ex are in the works. BIP expects to spend around $30-40M per year over the next 5 years as part of a multi-billion dollar cap ex program.

This might be an interesting way to play this same phenomenon.