Making a Better Match: Institutional Investors and Infrastructure

One of the most important government innovations in recent years emerged from one of the most mundane aspects of public administration: the procurement of goods and services. Changes in the standard models of public procurement have transformed Western liberal democracies in the last generation by introducing public-private partnerships that have brought governments new sources of funding and expertise.

Often when making the case for US infrastructure investment, someone will point overseas to Europe or Asia and wonder aloud why other countries have world-class, economy-shaping infrastructure and the United States doesn’t. There are obviously many reasons, but a key problem is that, unlike other nations, the United States is still over-reliant on the public sector for delivering infrastructure projects.

Today, those public resources are strained, especially those earmarked for transportation projects. On the federal level, the Congressional Budget Office estimates that the Highway Trust Fund will be unable to meet its obligations by next summer, if not sooner. And while money from the American Recovery and Reinvestment Act provided roughly $335 billion to support the country’s physical infrastructure, those funds are largely spent with little prospect for additional dollars anytime soon.

State funding sources are also shrinking. In addition to the twenty-one states that saw transportation program cuts in fiscal year 2015, more are proposed for the next fiscal year. While states have spent billions on energy efficiency and renewable energy programs over the decade, these programs are also under budgetary microscopes, and short-term prospects for funding are strained. Other state sources—such as revenue from taxes—that are earmarked for infrastructure projects are also in decline due to the recession. 

Transportation and Brownfield Redevelopment Investments

Funding for infrastructure projects can take a number of forms, including non-infrastructure financial products (such as government bonds, infrastructure-related corporate equity, or debt products) and dedicated pure infrastructure financial products. Governments can act as facilitators and provide credibility to infrastructure projects. By funding transactions or supporting active market players, development banks provide a powerful signal to the private sector. Their presence suggests political support and stability over the long term. In addition, dedicated financial instruments—such as guarantee instruments, long-term funding, and early-development stage facilities—can encourage long-term investment.

We serve both private and public entities on PPP financing, origination, development, operations, and stakeholder and regulatory management. We assist public entities in framing the case for PPP participation, developing the economic model and risk transfer solution for PPPs, managing PPPs and their various stakeholders, designing and staffing government units to review and manage PPPs, and optimizing the PPP process. We also help clients directly link their business unit strategies to their various financing strategies.

Whether serving the public or private sector, we work closely with our clients to build their skills to evaluate and manage PPPs. By applying a systematic approach, we help assess the full range of private and public options for funding infrastructure assets. Our proprietary models enable us to identify risk, advise on pricing, and assess risk mitigation approaches and their implications on financing strategy. Finally, by leveraging our vast network, we can facilitate connections to alternative sources of capital for our clients’ infrastructure projects.

 

Executive Leadership

Mr. James Moore

Mr. James Moore

Mr. David Solomon

Mr. David Solomon

Shareholder Composition

Overseeing massive funds with complex structures, institutional investors must execute successful investment strategies while simultaneously engaging with the public whose interests they represent. Our leadership team, dedicated industry experts, and senior advisors understand the unique challenges that institutional investors face and work together to develop innovative solutions that are designed to create lasting impact.