Thursday, June 16, 2011

New America Infrastructure Bank

Hearst Newspapers reported:

There should be an infrastructure bank, a public-private partnership bank, devoted to long-term — up to 45 years — financing of infrastructure projects. The idea, as espoused by panelists at a meeting on Capitol Hill last week.

Former Bush Transportation staffer Tyler Duvall, now with McKinsey & Company, spoke on Capital Hill, as did The Carlyle Group's Robert Dove, head of Carlyle's $1.2 billion infrastructure fundHearst gave Robert special Love.

Robert Love of the Carlyle Group beamed when he described a model project of public-private cooperation along highways in Connecticut.

Tyler Duvall retains his profiteering stripes, honed under W.  Tyler defended financiers' cost of capital and the need to make a superior return.  Carlyle targets 20% annual returns for infrastructure, subsidized by cheap money and long term guarantees from government entities.  Dove loves public money, stating forty year capital at a low interest rate, makes an unfinancible project fly.  Public subsidy, a private equity writer's (PEU's) dream

Moderator Michael Hirsch raised the issue of leverage, saying $10 billion could be leveraged to better than $600 billion.  Tyler avoided the 60:1 leverage question, reiterating his concern of quickly approving PPP projects.  Carlyle lost a fund leveraged 39:1 in spring of 2008.  Carlyle Capital Corporation (CCC) was one canary in the risk coal mine.

Carlyle's Dove raised the topic of financially stressed government's selling infrastructure assets, likely at discount prices.  Dove didn't cite any concern over selling capital assets or their revenue streams to fund short term government programs.  Chicago did this with parking, going through 75 years of money in less than 5 years.

Dove closed by saying union pension funds are invested in his $1.2 billion infrastru-cture fund.  They are chasing return in partnership with Carlyle.  This -helps explain one hollow SEIU promise. 

New America Foundation's Board is Chaired by Eric Schmidt of Google.  Did Schmidt talk infrastructure financing in St. Moritz recently?  Did they talk about the oligarch infrastructure cat fight on a Detroit bridge?  Maybe so.

Update 6-18-11:  Reuters commented on municipal, state and federal government asset sales

Update  9-1-11:  Sphere Consulting pushed the Infrastructure Bank.  Are they hoping for PEU business?

Update 4-17-12:  Private Equity News reported that pensions are planning to put as much as $3.5 trillion into infrastructure projects over the next decade, with allocations to the asset class rising “as high as 10% to 15%.”

Update 4-19-14:  The PEU Infrastructure boys met with Obama's Treasury Chief on this subject.