Investment opportunities in the transportation sector
The e-Meeting was moderated by Jose Moran, Partner at Baker & McKenzie LLP, and Jorge Valenzuela, Principal at ARUP, and included the following panelists: Amit Rikhy, President and CEO, Carlyle Airport Group, Helen Newell, Senior Vice President-Infrastructure, GIC, Juan Camargo, Managing Director, OMERS Infrastructure, Olivier Renault, Managing Director, Caisse de dépôt et placement du Québec (CDPQ), and Paul David, Head of Americas, Infrastructure Debt, Allianz Global Investors.
A panelist stated that US politicians have often talked a lot about increased governmental investment in rail, only for such investment to not actually materialize.
Environmental, social and corporate governance (ESG) concerns are a key piece of the puzzle from the freight perspective. From the commuter rail perspective, the Biden policy will focus on improving air quality and reducing congestion through increased use of light rail. The transportation sector may also see use of public-private partnerships (P3) for passenger transportation, and may also see private opportunities, the divestment of transportation assets by major industrial companies and governmental funding in situations where the private sector does not get involved.
Covid revealed that airports were more economically fragile than was previously thought. Airports are now thinking about how to make their assets more resilient and are examining which of their assets are noncore and could be divested or managed by private enterprise.
Airports are seeing rapid changes in technology, with the aim to create seamless and contactless journeys. Airports are looking at ways to make existing assets smarter and digitized, including the use of biometrics, investments in modernized HVAC, as well as smarter buildings and infrastructure. There is a huge potential role to play for the private sector and for P3s.
In the US, airports are managed at local level. Some cities are exploring airport privatization. Airports are considering ways in which private sector efficiency can be introduced to manage airport assets without effecting a change of ownership of such assets to the private sector. Airports are looking at ways to develop and operate their existing assets with the private sector.
A panelist noted that the US reliance on tax-exempt debt to finance infrastructure assets may be an inefficient means to finance these assets, in that the capacity of state and local governments to issue this debt may be limited. The panelist noted that some airports were looking outside the tax-exempt market for debt investors, and that some investors may be willing to invest in non-tax-exempt debt.
- Carbon capture
- Digital infrastructure