United States of America: Partner Alan Mark weighs investment opportunities from the new US Infrastructure Act
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The new $1.2 trillion Infrastructure Jobs and Investment Act (the “Infrastructure Act”) could boost deal flow in 2022 and years later for developers, strategic and financial investors, and their advisors. Allan Marks, global partner in project finance, energy and infrastructure, is assessing investment opportunities that could be created under the Infrastructure Act in recent interviews with Law360 Institutional investment in infrastructure. Mr. Marks has also co-authored an analysis of the myths surrounding US federal infrastructure policy in a new article published in the Journal Structured Finance Magazine.
Mr. Marks noted in interviews that the Infrastructure Act “spurs a lot of discussions” of 2022, but that “passing the bill is just the beginning. We have to look at what has already been enacted, how it is being managed, and then we will see more clearly what its side will do.” . While most of the expanded federal funding is likely to go toward public works projects, Mr. Marks predicts that “any time the whole pie gets bigger, you’ll find opportunities that make sense for private investors to come in.” These special investment opportunities include new energy projects, electric vehicle charging networks, and public-private partnerships.
One factor likely to contribute to the increase in public-private partnerships is a new requirement built into the law. Mr. Marks noted that projects worth more than $750 million, which receive funding assistance through the Transportation Infrastructure Innovation and Funding Act (“TIFIA”) program, will require a value-for-money (VfM) analysis. “The inclusion of VfM is really important and highlights the desire to lower life cycle costs, not just initial capital costs for procurement, to encourage long-term operational and maintenance efficiencies.”
Highlighting how the Infrastructure Act also extends the maximum term of a TIFIA loan to projects, Mr. Marks noted, “This additional flexibility will lower the cost of capital and make some projects more affordable and can lead to more infrastructure being built. The projects needed are Long-term assets, so these are beneficial changes to the terms of the TIFIA program.”
Investment opportunities in the transportation, energy and other sectors must grow. He predicts that the water sector, in particular, is likely to benefit from new investments. “Some water projects such as water treatment, storage and recycling will see a large, even surprising amount of private activity,” he says. “the [Infrastructure Act] It certainly encourages both public and private investment in developing the country’s water infrastructure. Marks also expects more airport deals, which often involve investments and private business.
To read his full comment, read Law360 The article, “1TB Infrastructure Package to Drive Big Work in BigLaw” and Institutional investment in infrastructure The article, “Infrastructure Week Becomes Reality: A Purposeful Federal Legislative Effort to Address the Nation’s Stalling Infrastructure Is Law.” (Please note that a subscription may be required for full access.)
Mr. Marks previously took an in-depth look at some of the other key provisions of the Infrastructure Act — including improvements in the federal permitting process and detailing new funding for energy and other infrastructure programs — in an article for Forbes: “Biden Signs the Infrastructure Act: Here’s How It Will Streamline $1 trillion in spending” once the law went into effect.
Mr. Marks has also published another new article (co-authored with Barry Gold) in which he backs away to take a broader look at the historical mismatch between available capital and the need for better infrastructure in the United States. Among other key findings, the authors note, “Contrary to the persistent belief that available capital is insufficient to finance new infrastructure projects, in reality, there is a lot of public and private capital available. Available capital is not fully deployed due to misalignment between Costs and benefits, lack of political will, ineffective project selection, and a misplaced focus on low-cost procurement which, together with unfunded budgets for operations and maintenance, lead to (a) infrastructure development without regard for economic viability or positive externalities, (b) the backlog of degraded infrastructure projects that need to be repaired or replaced, (c) higher life-cycle costs, and (d) idle capital and higher costs.” Their article appears in the Winter 2022 issue of the Gazette Structured Finance MagazineClick here: “Seven Myths about US Infrastructure.” (Membership with Structured Finance Magazine wanted.)
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