In addition to project delivery capabilities for PPP projects, there have emerged in recent years a number of domestic infrastructure funds sponsored by major financial companies in the U.S. that are seeking to compete with the major infrastructure funds sponsored by international financial companies. These U.S.-based financial companies are actively pursuing opportunities to help finance PPP infrastructure projects, particularly in the emerging transportation sector of the market.
Exhibit 47 lists the major U.S. financial companies involved in financing transportation infrastructure in the U.S., as well as the many international finance companies, many of which are also interested in the U.S. transportation infrastructure market.
Exhibit 47 - Partial List of U.S. and International Companies Financing Transportation Infrastructure
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U.S. Finance Companies | International Finance Companies |
• Goldman Sachs (US) • Citigroup and Blackstone (US) • GE & Credit Suisse First Boston (US) • Morgan Stanley (US) • Carlyle Infrastructure Group (US) • JP Morgan Chase (US) • Lehman Brothers (US) | • Babcock & Brown (AU) • Hastings Fund Management (AU) • MIG/Macquarie Bank (AU) • DRIVE - Transurban (AU) • HSBC Investment Bank (Asia) • Borealis Infrastructure Fund (CAN) • Ontario Teachers Fund (CAN) • Galaxy Fund (France) • Deutsche Bank (Germany) • Fondo Italiano (Italy) • Japan Bank for Intl. Coop. (Japan) • Star Capital Investors (UK) • Meridiam Infrastructure Fund (UK) • Innisfree (UK) |
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Source: Public Works Financing Newsletter, Volume 213, February 2007, p. 5.
These funds tap a variety of institutional investors and well as individual investors through mutual funds, large pension funds, and insurance funds. It is estimated that the purchasing power of just 10 of the largest international infrastructure funds is about $200 billion.
As the financial community recognizes the opportunities presented by investing in U.S.-based surface transportation infrastructure and additional transportation infrastructure funds get established, particularly those that tap the long-term institutional pension and insurance funds, the available funds for investment are expected to grow significantly. While there remain legal and institutional challenges to PPP projects in this country, the financial outlook is very bright for surface transportation PPP projects in the U.S., provided the following conditions are met:
• Public understanding and support;
• Political support and visible champion(s);
• Inst itutional support;
• Broad legal authority to apply PPPs to develop/finance surface transportation projects;
• Adequate funding sources committed to the project; and
• Capable public agency staff to administer the PPP project and competitive private provider firms to delivery the project most cost-effectively in a cooperative spirit of partnership.