US infrastructure to attract global investors

The Trump Administration’s infrastructure reform is expected to attract global capital and expertise to the US market, according to RARE’s chief investment officers and portfolio managers, Nick Langley and Richard Elmslie.

The White House’s “Legislated Outline for Rebuilding Infrastructure in America” would be a part of the Budget proposal for the fiscal year from October 1, 2018 – September 30, 2019, under which the Administration would want Congress to approve $200 billion federally funded investment to leverage at least $1.5 trillion in infrastructure investment.

This would include:

• $100 billion Incentive Program to ‘encourage State, local and private investment by awarding project sponsors incentives for demonstrating innovative approaches’
• $50 billion Incentive Program to ‘enable rural America to address its unique infrastructure challenges’
• $20 billion Transformative Projects Program to ‘spur competition around bold, innovative, and truly transformative projects that could dramatically improve future infrastructure”
• $20 billion finance Program to ‘to address a broader range of infrastructure needs, giving State and local governments increased opportunity to finance large-scale infrastructure projects’
• 410 billion Federal Capital Revolving Fund, the proposal to ‘establish a mandatory revolving fund to finance purchases, construction or renovation of federally owned domestically civilian real property’

According to RARE, if this proposed budget was approved, certain segments of the listed infrastructure market with the ‘shovel-ready projects’ could be well positioned to take advantage of these programs.

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Langley and Elmslie said in a note: “We expect the proposed incentives will attract global capital and expertise to the US market, particularly within the toll road and airport segment which includes many operators that have been active in the US over the last decade.”

Within the toll road sector, RARE mentioned Spanish infrastructure operator Ferrovial and Australian toll road operator Transurban which both had proven experience in building and operating US toll roads.