Wall Street Sees Big Wish Granted in Biden’s Infrastructure Deal

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It’s just two words of jargon near the bottom of the infrastructure plan the White House posted Thursday -- “asset recycling” -- but for a slew of investing titans that longed to see that phrase, it’s reason to rejoice.

The prospect of investing in massive U.S. government projects -- say, by leasing an airport and reaping revenue for decades -- has tantalized Wall Street ever since talk about a big infrastructure push broke out in the wake of 2008 financial crisis. Yet time and again, lawmakers couldn’t reach a deal to open the way. Some were worried taxpayers would get the raw end of deals, or that the public would ultimately face higher prices to travel, commute, park and turn on the lights.

Wall Street Sees Big Wish Granted in Biden’s Infrastructure Deal

In the meantime, alternative asset managers lined up investor commitments for massive infrastructure funds, some reaching into the tens of billions of dollars that have yet to be fully deployed. Other institutions, such as pensions and sovereign wealth funds, have expressed interest in funding U.S. projects.

Now -- though the details posted Thursday were very scant -- it seems a compromise might be at hand.

“The bipartisan group that put this bill together has been keenly focused on the importance of private investment, including the concept of asset recycling, which has been championed by infrastructure funds for a number of years,” said DJ Gribbin, the former special assistant to the president for infrastructure policy from 2017 to 2018 who is also a senior operating partner at Stonepeak Infrastructure Partners.

President Joe Biden’s administration could kick off an asset-recycling initiative with federal government-owned power and generation companies such as the Tennessee Valley Authority and the Bonneville Power Administration, Gribbin said. He added that government-owned dams around the country that generate hydroelectric power and haven’t been well maintained could also be part of the program. Other federally-owned infrastructure that investors have long coveted include the Ronald Reagan Washington National Airport and Washington Dulles International Airport.

Asset recycling -- a policy many credit as being coined in Australia -- features the sale or leasing of infrastructure such as roads, airports and utilities to private operators. Proceeds are then used by governments to finance new construction without incurring new debt. It can be employed at a federal, state or local government level.

The size of the potential capital infusion from private investors under the $579 billion infrastructure bill wasn’t announced. But the reference to asset recycling and public-private partnerships -- which were listed among more than a dozen proposed sources of financing -- is a start.

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