INVESTING/PORTFOLIO STRATEGIES

White House launches rural investment fund

The White House launched a rural infrastructure investment fund Thursday as part of a public/private partnership to attract more investors to rural projects, including energy and infrastructure development.

An initial $10 billion commitment is from CoBank, a $102 billion cooperative bank based in Denver that provides loans, export financing and other financial services to agribusinesses and utility providers in all 50 states. Denver-based Capitol Peak Asset Management will manage the assets of the new Rural Infrastructure Opportunity Fund.

Projects will be funded through public, private or combined sources of investment dollars, including government guarantee programs. Investors can make debt and equity investments in either single or bundled projects. Target investments will include hospitals, schools, rural waste systems, energy projects and broadband expansion. Administration officials believe it will give institutional investors better access to rural development projects.

“The fund is immediately open for business, and more investors can now add to the initial $10 billion in available capital,” the White House said in a statement.

"This is a new kind of public/private partnership. It was deliberately designed as a platform that would attract the widest possible range of investors,” said Leo Tilman, executive chairman of Capitol Peak, in an interview. “One of the reasons that institutional investors have rarely participated in these projects, at least in the U.S., is because these are complex and less familiar asset classes.”

In addition to asset management and risk intelligence expertise on the Capitol Peak side, “we needed the foremost expert in these asset classes, and that’s the role that our partner CoBank will play as anchor investor,” said Mr. Tilman.

In addition to recruiting new sources of private capital, the fund will serve as co-lender on some projects and as a private lender for others. “It will enhance access to capital for a wide array of vital infrastructure projects,” said CoBank CEO Robert Engel in a statement.

The Department of Agriculture will help identify investment projects. The federal agency has a backlog of projects but finite resources, said Agriculture Secretary Roger Vilsack in a statement. “We know where investment opportunities exist, so we are in a position to help promote these projects among investors. We can … help promote substantial private investment in projects,” he said.