The point about regional familiarity that both nondogmatic and Snake make is a good one, but it's also important to remember that a key component of BIP's rate of return is the discount to replacement cost of the purchase price. It's hard to earn a 12-15 percent rate of return on annual increases in cash flow from highly-regulated infrastructure assets. But if you buy such an asset at a significant discount to its replacement cost because the seller has to sell, you've just provided a turboboost to your returns going forward.Before the financial crisis of 2008, Brookfield was in the market for good deals. Now they want great deals. For value investors like Brookfield, financial crises are actually good things because they motivate sellers and increase the rates of return available to those with capital (see Warren Buffett). I like to think of Brookfield these days as a financial ambulance staffed by paramedics waiting for calls to 911.The extent of the discount to replacement cost they can expect depends, of course, on the motivation of the seller. An unmotivated seller won't offer much of a discount, if any. Two of Brookfield's biggest deals in the wake of the crisis -- Prime Infrastructure and General Growth Properties -- were overleveraged outfits that found themselves in danger of default when credit markets seized up. Brookfield rode to the rescue with the cash to recapitalize and got major ownership stakes in return.The financial crisis is now centered in Europe, where, as everyone knows, the level of indebtedness of southern European countries threatens the existence of the Euro. My sense is Brookfield believes there will be some highly motivated sellers in this group at some point. Where the assets they choose to divest are located is likely to be less important than the quality of those assets, the reliability of their cash flows and, most important, the discount to replacement cost of the prices they are willing to accept to raise cash and stave off the prospect of default. The greater the discount, obviously, the greater the rate of return for Brookfield going forward.So BIP's top priority, I'm guessing, is keeping track of distressed asset holders so it is ready to ride to the rescue when those Euros start calling 911.
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