The buying and selling of equity in PPP project companies has created a new market in which partial or full ownership of SPCs can be acquired by other companies, banks, pension and investment funds. This market is a trading system for infrastructure assets with seven key characteristics. It is:
• A private market with commercial values and objectives to value publicly funded infrastructure assets;
• Exploits offshore tax havens to reduce tax liabilities and increase profits;
• A largely unregulated market (except for general financial services regulations);
• Democratically unaccountable;
• Secretive and operates on the basis of minimum disclosure;
• Supported by agents, advisers, brokers and lawyers who provide financial and legal advice, arrange finance and carry out due diligence.
As soon as the secondary market began to grow, joint ventures were formed between PPP construction companies, banks or pension funds to hold operational projects and listed infrastructure funds, usually offshore, and to acquire operational PPP projects to build a portfolio of assets. Little distinction is made between economic and social infrastructure, with many transactions consisting of bundles of different types of assets.
The secondary market is not a shadow market; it deals with real assets, real money and change of ownership. The response to claims that it doesn't matter who controls or operates public buildings or who delivers public services is to understand that the nature, scope, quality, governance, delivery and cost of public goods and services are being radically changed and reconfigured in the interest of private capital.
The sale of PPP equity and the growing secondary market are part of this wider process. So who controls and operates public buildings and delivers public services is of vital public interest.