Private investors are getting more active in infrastructure investing as Congress struggles to find more creative ways to stimulate investment, panelists at the Milken Institute Global Conference in Beverly Hills said Monday.
“Infrastructure is really a great tool to diversify our portfolio,” said panelist James Pass, senior managing director and municipal sector manager for Guggenheim Partners. “It's an asset class that gives you opportunities because it is still evolving.” But he questioned whether public pension funds and other institutional investors have the capacity to research and manage those investments now. “Is everybody really ready?” Mr. Pass asked.
Rep. John Delaney, D-Md., said there is bipartisan support in Congress for legislation creating the American Infrastructure Fund, which would be funded by the sale of $50 billion worth of infrastructure bonds offered to U.S. companies, which could avoid tax bills on overseas earnings for every dollar they invest in the bonds. The infrastructure dollars would go to state and local governments to spend, with less money going to areas that lack public-private partnerships. To date, 33 states have passed legislation enabling those partnerships.
Another bill introduced by Mr. Delaney, the former CEO of commercial lender CapitalSource, would replenish the Highway Trust Fund, “but it's a big fight all the time,” he said.
Mr. Delaney told an earlier panel on housing that Congress is also considering several pieces of legislation to increase capital market opportunities for housing investments, both single- and multifamily.
While housing as an asset class has “a very small percentage” of institutional investors now, “it's very exciting to see the capitalization starting to come into this market,” said panelist John Bartling, president and CEO of Invitation Homes, part of Blackstone Group.