Banks are investing big in infrastructure despite stalled federal plan
- Investors are sinking money into U.S. infrastructure, even though the national plan championed by President Donald Trump and his administration has yet to materialize, according to Bloomberg.
- This enthusiasm has been underscored by firms like Australian-owned IFM Investors, which has raised almost $500 million for an infrastructure-dedicated, open-ended debt fund and plans to raise a similar amount every year. IFM boasts Kentucky and Virginia retirement plans among its investors. According to IFM, infrastructure investments can survive the ups and downs of the economy and still offer reliable revenue streams. Investment firms like Blackstone Group and the Carlyle Group have also jumped into the infrastructure arena, raising billions of dollars.
- Sadek Wahba, chief investment officer and co-founder of I Squared Capital, a private equity firm focused on infrastructure, told Finance & Commerce that U.S. states should push forward with their own infrastructure projects and only turn to the federal government for gap funding. He added that a national plan that provides states incentives for taking on infrastructure projects might not be enough to propel state officials into action. I Squared's ISQ Global Infrastructure Fund II has raised $7 billion for global energy, utilities, transportation and telecommunications projects.
Wahba's suggestion is similar to what the president has been advocating for, which is that states take more responsibility for infrastructure projects that are regional in nature and not look to the federal government for a significant percentage of funding. And some states are doing just that. For instance, Indiana Gov. Eric Holcomb on Tuesday announced that the state would make a $1 billion investment into infrastructure projects in 2019. The program includes at least $790 million to finish major highway projects and $20 million to add more international flights.
Nevertheless, investment from the private sector is good news for contractors who specialize in the construction of roads, bridges, utilities and other public assets, especially since the Trump administration has prioritized other issues over its call for an overhaul of the nation's infrastructure.
The president hit back this week against AFL-CIO President Richard Trumka after the labor chief criticized him for not yet delivering a plan, adding that the delay was causing workers harm. Trumka added in a media interview that "the things he's done to hurt workers outpace what he's done to help workers."
Follow Kim Slowey on Twitter