Jeremy Zirin, CAIA
Senior Research Analyst, Real Assets
Pending a final vote count in Florida, the U.S. midterm election results are in with the Democrats regaining control of the House and Republicans maintaining majority control of the Senate. While a split Congress may lead to gridlock on various policies, one thing both parties should be able to agree on is the need for infrastructure investments in the U.S.
The historical under-investment, coupled with the lack of available public-sector funding, has impaired the government’s ability to deliver public services at adequate levels. The American Society of Civil Engineers (ASCE) estimated that $4.5 trillion needs to be invested through 2025 to upgrade the nation’s infrastructure. In its annual report, the ASCE in 2017 gave an overall “D+” grade for the condition and capacity of infrastructure in the U.S., further highlighting the need for additional investment.
Consequently, governments and public agencies have begun looking beyond the traditional funding methods to private investment in infrastructure via privatizations and public-private partnerships (“PPPs”). As a result, ownership and operation of infrastructure assets has been gradually moving from the public to the private sector on a global level. With this trend, the role of government has shifted from the provider of services to that of a regulator. This has provided a stream of investment opportunities and fueled development of a distinct alternative asset class for institutional investors that complements fixed income, public equities, real estate, and traditional private equity investments, and whose popularity is likely to increase as more investments and hence products come to fruition.
The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.
This week’s chart of the week examines the price performance of Pacific Gas and Electric (“PG&E”) Corporation’s public debt and…
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