PF Archive

The new class

01 11 2006

The US infrastructure market is in a state of flux. With both pension funds and private equity firms showing serious interest in infrastructure assets, a rash of new US infrastructure funds have sprung up. As a consequence, billions of dollars are now being bestowed upon the sector, and many new projects are in the works. This is changing how infrastructure assets are financed, how deals are structured and the pricing of infrastructure assets. Over the past 24 months, more than $500 billion of leveraged infrastructure purchasing power has been injected into the US infrastructure space, says Rob Collins, executive director and head of infrastructure M&A at Morgan Stanley. "This has been driven by pension funds and private equity firms that are looking to invest in secure assets with municipal characteristics, which is difficult to find outside this type of asset class," he says. The desire for longer-term, stable assets comes on the back of a changing regulatory environment and investment climate. John Minderides, managing director and global head of transition management at JP Morgan says: "Pension funds are facing increasing scrutiny on their activities, and there is growing pressure to look at issues such as solvency and accounting changes. Many funds are restructuring assets to deal with this." Institutions such as pension funds with long-term liabilities are looking at ways to better match their assets and liabilities, adds Geoffrey Spence, global head of infrastructure finance in project and export finance at HSBC. "In many respects the biggest thing they have to deliver right...