Investment Banks Eye Crumbling Roads And Bridges
September 25th, 2008
Reeling from more exotic investments which imploded during the credit crisis. major investment banks are now turning their attention to infrastructure projects with transportation high on the hit list. Kohlberg Kravis Roberts, Carlyle Group, Goldman Sachs, Morgan Stanley and Credit Suisse are among the investors who have amassed an estimated $US250bn to finance a wave of infrastructure projects mainly in the US where public funding is not keeping pace with demand.
Public Sector Crisis. Until recently, the use of private funds to build and manage large-scale US infrastructure assets was slow to take root. However, the strategy is gaining steam as Govts struggle under mounting deficits which have limited their ability to improve crumbling roads, bridges and even airports. In addition, with politicians like Gov Arnold Schwarzenegger of California warning of a national infrastructure crisis, public resistance to private financing may start to ease. “Budget gaps are starting to increase the viability of public-private partnerships,” says Norman Mineta, a former Secretary of Transportation who was recently hired by Credit Suisse as a senior adviser to such deals.
Bigger Than Commerclal Property. Since the early 1990s, the US has had no comprehensive transportation development policy, and responsibilities are increasingly pushed off to States, municipalities and millions of metropolitan planning organisations. The result has been chronic underfunding and neglect which the private sector is eager to fill. Mark Weisdorf, Head of Infrastructure Investments at JP Morgan, predicts infrastructure will be a major long-term growth area for such banks. “Ten to 20 years from now infrastructure could be larger than real estate.”
Copyright © Media Information Ltd
NZ Transport Intelligence Briefing
Amalgamated Dairies
Strait Shipping