Private equity funds raising tens of billions of dollars to repair — and perhaps own — U.S. roads, bridges, airports and power lines now have a target list.
The White House on Monday released a 53-page proposal outlining President Donald Trump’s plan to stimulate investment in U.S. infrastructure. Along with possibilities such as expanding the use of tax-exempt debt and letting states charge tolls on interstates, Trump wants to allow some federal assets to be sold to state and local governments or to private entities.
Potential private equity buyers are primed. Unlisted infrastructure funds had $154 billion of cash ready to invest worldwide as of September, according to data compiled by Preqin Ltd.
Thirty-nine percent of institutional investors plan to put more money into infrastructure in 2018 than they did in 2017, Preqin data show. Infrastructure outpaces private equity, private debt, real estate and natural resources as the asset class with the greatest proportion of investors planning to increase allocations in the long run, Preqin said.
The administration cited several examples of assets that may fit the bill:
- Ronald Reagan Washington National Airport as well as Dulles International, which is also located in Virginia near Washington
- George Washington and Baltimore Washington Parkways
- The Washington Aqueduct
- Tennessee Valley Authority transmission assets
- Southwestern Power Administration transmission assets
- Western Area Power Administration transmission assets
- Bonneville Power Administration transmission assets
“Providing federal agencies authority to divest of federal assets where the agencies can demonstrate an increase in value from the sale would optimize the taxpayer value for federal assets,” according to the proposal.
Investor interest in infrastructure is fueling ever-larger pools of capital, including Brookfield Asset Management Inc.’s $14 billion fund and Global Infrastructure Partners’ $15.8 billion pool. Blackstone Group LP, equipped with a $20 billion anchor commitment, is aiming to raise $40 billion of equity for the strategy.
©2018 Bloomberg L.P.