Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2023 Defined Contribution East
    • 2023 ESG Investing
Breadcrumb
  1. Home
  2. ALTERNATIVES
December 13, 2021 12:00 AM

One bill down, investors eye potential of Build Back Better

Renewables could get a bigger boost than in infrastructure law

Arleen Jacobius
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    David Scaysbrook
    David Scaysbrook sees lots of investment opportunities in the bill that passed the House.

    Infrastructure managers like a lot of what's in the new $1.2 trillion infrastructure law, but many of them love how the Build Back Better Act could boost renewable energy projects.

    The nearly $2 trillion Build Back Better Act, at least in the form passed Nov. 19 by the House of Representatives, could "produce more upside for U.S. GDP and jobs over the immediate term," said David Scaysbrook, co-founder and managing partner at $2.5 billion money manager Quinbrook Infrastructure Partners Group, City of Gold Coast, Australia. That's because the bill now before the Senate offers near-term investment stimulus that should entice private capital to accelerate the construction of more clean power plants, invest in new U.S. manufacturing facilities, establish a U.S. hydrogen sector and create electric vehicle infrastructure, among other projects, Mr. Scaysbrook said.

    The Build Back Better Act, if passed, would be " my favorite bill ever," said Reuben Munger, Boulder, Colo.-based managing partner of $2.5 billion infrastructure manager Vision Ridge Partners.

    Related Article
    Managers applaud renewable energy subsidy provisions in House bill

    While the infrastructure law is more general and more sector-focused on such areas as broadband, transportation and energy transmission, the Build Back Better Act is more targeted, supporting such technologies as biofuels and solar power, and would increase infrastructure investment opportunities, said Adam Bernstein, a Boston-based managing director at $1.5 billion infrastructure money manager North Sky Capital LLC.

    While the Build Back Better Act still faces heated debate in the Senate, the Infrastructure Investment and Jobs Act signed into law by President Joe Biden on Nov. 15 has the approval of managers who said it would greatly increase investment opportunities in the U.S., which has lagged Europe in deals for infrastructure managers. The new law includes $550 billion for everything from roads and bridges to electric vehicle infrastructure.

    "We feel the impacts (from the law) will be positive for private capital mostly due to a healthy sentiment boost and this legislation making U.S. infrastructure renewal a top policy priority for the first time," Mr. Scaysbrook said.

    The new infrastructure law's emphasis on hydrogen and electric vehicles "reflects this administration's plan for the ambitious evolution of the U.S. economy of tomorrow," he said. Meanwhile, nuclear, carbon capture and transmission network initiatives included in the law "are aimed at today's problems that pose roadblocks to achieving that ambition," he said.

    Getty Images
    Optimistic outlook

    "I'm optimistic on the outlook for private investments in U.S. infrastructure" following the passage of the Infrastructure Investment and Jobs Act, said Tom Osborne, New York-based executive director on the infrastructure team of IFM Investors with A$179 billion ($128.4 billion) in total assets under management."The bill doesn't go as far as it could to enable public-private partnerships, but it does contain some useful provisions."

    What the new law does include are provisions that facilitate investment by infrastructure managers by way of private-public partnerships, Mr. Osborne said. For example, the law doubles the amount of tax-exempt private activity bonds that can be issued to finance privately developed and operated highway or surface freight transfer facilities to $30 billion from $15 billion. It also expands the use of these bonds to include broadband and carbon-capture projects.

    These bonds provide low-cost debt including in private-public partnerships to finance construction of new facilities, Mr. Osborne said.

    Karl Kuchel, New York-based senior managing director and head of infrastructure at Macquarie Asset Management, Americas, called the legislation "a welcome step forward" that will begin to address historic underinvestment in infrastructure in the U.S.

    The increased federal funding creates a moment to re-examine the possibilities of using public-private partnerships for such projects as accelerating decarbonization of regulated utilities, improving port terminal productivity and expanding broadband access, Mr. Kuchel said.

    Macquarie has $142.8 billion in infrastructure assets under management worldwide.

    Quinbrook's Mr. Scaysbrook agreed that it's now all about implementation of the law at the state and local levels through "multiple public agencies working in tandem with private capital, which is where some skepticism remains," he said.

    Keith Derman, a New York-based partner and co-head of $282 billion Ares Management Corp.'s infrastructure and power business, said he thinks the signed infrastructure law is a "landmark piece of legislation that we believe will encourage additional capital flows into the infrastructure industry."

    Ares executives expect the law will promote continued investment in the renewable energy sector by upgrading the electricity grid as well as adding more dollars around electric vehicle infrastructure, Mr. Derman said.

    Related Article
    Biden signs bipartisan infrastructure bill
    Renewables could benefit

    Gordon Bajnai, a London-based partner and head of global infrastructure at Campbell Lutyens, an alternative investment placement agent and secondary market advisory firm, said the energy transition and decarbonization are big winners from the infrastructure law, which could drive allocations into the renewable infrastructure sector.

    "The next concern is that public funding should not crowd out private capital, but multiply it instead," Mr. Bajnai said.

    Investors are attracted to the asset class as an inflation hedge. However, infrastructure's performance has been "resilient," producing a 13.4% internal rate of return for the year ended March 31, according to Preqin's third-quarter 2021 infrastructure report. Overall, infrastructure funds raised a combined $38 billion in the third quarter, the third highest fundraising quarter in the past six years, Preqin said. However, this was after a slow fundraising year in 2020, when infrastructure funds raised a total of $54.6 billion, 17.6% less than in 2019, Preqin data shows.

    Despite the law's November signing, managers said they don't anticipate the increased funding to create additional infrastructure investment projects for at least a year or more. The reason is that the additional money is being dispersed from the federal government to state and local governments. The money is not only being distributed to the states and local governments through existing structures such as the Clean Water State Revolving Fund, which provides communities low-cost financing for water quality infrastructure projects, but also through new mechanisms that need to be created for the projects now being funded by the infrastructure law such as electric vehicle infrastructure, North Sky's Mr. Bernstein said.

    "The actual opportunity for an infrastructure investor, by and large, won't materialize for a year plus," Mr. Bernstein said.

    Mr. Munger at Vision Ridge Partners said his team is "very enthusiastic about the infrastructure law" because it will smooth over road bumps that had been in the way of adoption of renewable initiatives.

    One example, Mr. Munger said, is the creation of a federal Grid Deployment Authority to finance and encourage the development of high-voltage transmission lines, giving U.S. Energy Department final authority to create national transmission corridors for clean electricity initiatives, Mr. Munger said. A few years ago, many attempts to build out the transmission lines needed to transport energy produced by renewable energy were stopped at the state and local levels, he said.

    Related Articles
    Bill to bolster Social Security discussed in House
    Fed's Powell says higher inflation likely to linger
    Retirement measures cut from legislation, but still priority
    Recommended for You
    Blackstone sign, New York headquarters
    Blackstone reports record assets of $975 billion for 2022, just shy of $1 trillion goal
    Partners Group hires Tokyo head from Apollo
    Stewart Hay
    Stewart Hay joins Northleaf Capital Partners to expand private markets
    The Institutional Investor's Guide to ESG Investing
    Sponsored Content: The Institutional Investor's Guide to ESG Investing

    Reader Poll

    January 25, 2023
    SEE MORE POLLS >
    Sponsored
    White Papers
    The Future of Infrastructure: Building a Better Tomorrow
    Fulcrum Issues: Equity Returns and Inflation — Choose Your Own Adventure
    What Matters Most in Considering a Private Debt Strategy
    Why pursue direct lending in the core middle market?
    Research for Institutional Money Management
    Are Factors a Thing of the Past?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    December 12, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2023 Defined Contribution East
      • 2023 ESG Investing