Demand for Talent Intensifies as Infrastructure Assets Lure Investors
Investment in America’s infrastructure is a hot topic in Washington. U.S. presidential contenders, Republican John McCain and Democrat Barack Obama, have spent the past week articulating policy goals for shoring up and modernizing the nation’s infrastructure, according to Reuters. The country’s infrastructure is also a topic of growing interest on Wall Street as politicians and investors alike are feverishly pushing for new methods in which the federal government can finance infrastructure more effectively, with a combination of public and private capital.
Already, investors around the world are seeking out opportunities in infrastructure. As a result, executive search firm, A.E. Feldman, says infrastructure finance jobs are opening up for candidates with backgrounds in investment banking as well as experience in analyzing and executing structured financings. The most sought after candidates are those with experience in infrastructure transactions and civic engineering. Additionally, legal jobs are opening up for attorneys with expertise in global project development and complex financial transactions.
Infrastructure Gap Growing
The U.S. has at least a $170 billion annual funding gap in addition to its outmoded land use and infrastructure models, according to a report by the Urban Land Institute and Ernst & Young. The American Society of Civil Engineers (ASCE) also estimates that $1.6 trillion is needed over a five-year period to repair decaying roads, bridges, power plants, levees, rail lines and other systems. Moreover, the ASCE says the nation’s 54,000 drinking water systems also face an annual shortfall of at least $11 billion to replace aging facilities over the next 20 years.
Although McCain has not proposed a blueprint for road, rail and bridge construction, Obama has called for the establishment of a $60 billion National Infrastructure Reinvestment Bank over 10 years to rebuild roads, bridges, ports and rails. Obama is also in favor of leveraging private investment to help fund improvements.
Investing in Infrastructure
Already a number of players have come forward looking to make multibillion-dollar investments in U.S. infrastructure assets. According to Dow Jones Financial News, the appetite for infrastructure funds increased in the second quarter, raising $11.4 billion. The report states that continued interest in these sectors is expected in the second half of 2008, citing provisional data from research provider Preqin.
Financial firms, including Australia’s Macquarie to Goldman Sachs, Morgan Stanley and Credit Suisse have all set up infrastructure funds or units.
Morgan Stanley recently announced that it has raised billions to invest in infrastructure, including assets in sectors like transportation, energy and utilities. The firm successfully closed Morgan Stanley Infrastructure Partners (”The Fund”) with $4 billion of equity commitments, exceeding an initial target of $2.5 billion.
Global Infrastructure Partners (”GIP”), an independent fund set up by General Electric Co and Credit Suisse Group that invests in infrastructure assets worldwide, has also announced that it has raised $5.64 billion for its flagship infrastructure fund. In a statement The Fund says the close “underscores GIP’s position as a leading global investor in, and operator of energy, transport and water/waste infrastructure assets.”
Goldman Sachs also gathered $6.5 billion for investment in infrastructure back in December 2006, including $750 million of the New York-based firm’s own money, reports Bloomberg.
And in its most recent move, Babcock & Brown has used its unlisted U.S. pension fund-backed infrastructure offshoot to buy two American natural gas companies for $910 million. This comes as B&B is seeking to restore investor confidence in its business model following a huge slide in its stock exchange-listed funds. B&B narrowly managed to avoid entering a four-month credit review period by its banking syndicate.
In a statement, Phil Green, CEO of Babcock & Brown said, “The banking syndicate was provided with an update of the business and detailed financial information. “The decision by the banks underscores the strength of our business and the banks commitment to Babcock & Brown.”
Ultimately, one of the main reasons why the self-interest of the banks involved and the need to put on a show of confidence in the management team won out because the banks all know that the next lending boom is in global infrastructure, according to the Business Spectator. The report predicts that infrastructure “will be their salvation as the U.S. housing market continues to collapse.”
A.E. Feldman has a specialized team of recruiters dedicated to infrastructure and project finance. To learn more about these relevant issues or inquire about existing and future infrastructure finance opportunities, contact the firm’s specialized recruiting team here.
