Infrastructure-Investment Binge Is Set to Continue -- With or Without Washington
By Miriam Gottfried
As the Biden administration prepares to take over in Washington,
hopes for a sweeping infrastructure bill are running high. But even
if one does come to pass, Wall Street isn't counting on getting a
big piece of it.
President-elect Joe Biden campaigned in part on a $2 trillion
plan to upgrade the nation's infrastructure and combat climate
change by rebuilding roads and bridges, eliminating carbon
emissions from the power grid, putting more Americans in electric
vehicles and funding zero-emissions mass transit.
But there's a distinct possibility that control of the Senate
will remain with Republicans, which could make it more difficult
for Mr. Biden to enact his agenda. Even if Democrats control both
houses of Congress or they manage to agree on a package with
Republicans, there is uncertainty over whether it would contain
provisions to encourage states and cities to partner with private
investors, in part because Democrats have historically opposed
privatizing public assets.
In 2016, many investors formulated new strategies around the
trillion-dollar infrastructure plan that then President-elect Trump
was promising, only to be disappointed when it failed to
materialize. That experience has tempered enthusiasm this time
"There's been a significant hope for infrastructure for half a
decade now," DJ Gribbin, who served as President Trump's
infrastructure adviser, said in an interview. "The problem with
infrastructure is that everyone says, 'I would like
infrastructure.' And then you ask them what they mean by that, and
they all have different things in mind."
That hasn't stopped private infrastructure investment from
This year, there have been $88.9 billion of infrastructure deals
in North America through Dec. 8, a decrease over the record $226.5
billion for all of last year, but above the full-year total in
2018, according to Preqin. Among the hottest sectors have been
digital and communications infrastructure, renewable energy and
ports -- areas that have thrived without much government
More is sure to come. Private-equity firms have already broken
records in 2020 for North America-focused infrastructure
fundraising, raking in $52.3 billion so far, Preqin data show.
That's $1 billion more than they raised in all of 2019, the
previous record, and puts total unspent cash earmarked for
infrastructure investment in the region at $102.8 billion.
Broadband assets have been in demand as the shift toward working
from home during the pandemic has highlighted their importance.
Last month, Stonepeak Infrastructure Partners announced a deal to
buy Astound Broadband, the sixth-largest U.S. cable-TV provider,
for $8 billion including debt.
Competition for renewable-energy assets also has become heated
as pension funds and other institutions move toward environmentally
responsible investing and away from fossil fuels. In November, KKR
& Co. said it was investing about $1.4 billion in portfolios of
wind and solar assets. It also signed a letter of intent to invest
$900 million in future renewable-energy transactions with a
subsidiary of NextEra Energy Inc.
"Power and renewables has been very big, despite an
administration that has not necessarily supported it," said Nasir
Khan, head of infrastructure for the Americas at French investment
bank Natixis SA. "People see it as a natural progression."
While many firms are now wary of fossil-fuel bets, a few have
made contrarian investments in traditional energy assets. In
September, Blackstone Infrastructure Partners and Brookfield
Infrastructure Partners LP closed a deal to buy 42% of natural-gas
pipeline owner and operator Cheniere Energy Partners LP for about
There are some areas where investors and advisers say Mr. Biden
may be able to act without Congress. For example, he could
institute policies that would help expand access to broadband in
rural areas, or accelerate the shift toward renewable energy by
restoring fuel-economy standards for vehicles and allowing states
to set their own climate targets.
Skepticism hasn't kept firms from compiling a wish list should a
blockbuster infrastructure bill come to pass. One often-touted
model is that of Australia, where a state or local government sells
a public infrastructure asset to private investors and is awarded a
bonus from the federal government.
And even if a bill doesn't include an explicit role for private
capital, significant government spending on infrastructure could
still open up opportunities for enterprising investment firms to
Write to Miriam Gottfried at Miriam.Gottfried@wsj.com
(END) Dow Jones Newswires
December 18, 2020 05:44 ET (10:44 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.