Partner Allan Marks Weighs Investment Opportunities From New US Infrastructure Law – Finance and Banking

The new $1.2 trillion Infrastructure and Investment Jobs Act
(“Infrastructure Act”) could boost deal flow in 2022 and
for years thereafter for developers, strategic and financial
investors, and their advisors. Global Project, Energy and Infrastructure
Finance partner Allan Marks assesses the investment
opportunities that could be created by the Infrastructure Act in
recent interviews with Law360 and Institutional
Investing in Infrastructure. Mr. Marks has also co-authored an
analysis of myths surrounding US federal infrastructure policy in a
new article published in the Journal of Structured
Finance.

Mr. Marks noted in the interviews that the Infrastructure Act is
“stimulating lots of discussions” for 2022, but that
“passage of the bill is just the beginning. We have to look at
what was actually enacted, how it is administered, and then we will
see more clearly what the private side actually does with it.”
While most of the expanded federal funding is likely to go towards
public works projects, Mr. Marks expects that “any time the
whole pie is getting bigger, you will find opportunities where it
makes sense for private investors to come in.” Those private
investment opportunities include new projects in energy, EV
charging networks, and public private partnerships.

One factor likely to contribute to the increase in
public-private partnerships is a new requirement built into the
law. Projects valued over $750 million receiving financing
assistance through the Transportation Infrastructure Finance and
Innovation Act (“TIFIA”) program, Mr. Marks points out,
will require a value-for-money (VfM) analysis. “The inclusion
of VfM is really important and highlights the desire to lower life
cycle costs, not just up-front capital costs of procurement, to
encourage operating efficiencies and long-term
maintenance.”

Spotlighting how the Infrastructure Act also extends the maximum
TIFIA loan term for projects, Mr. Marks noted, “This added
flexibility will lower the cost of capital and make certain
projects more affordable and could lead to more infrastructure
being built. So many of the infrastructure projects needed are very
long-lived assets, so these are useful changes to the terms of the
TIFIA program.”

Investment opportunities should grow in transportation, energy
and other sectors. He predicts that the water sector, in
particular, is likely to benefit from new investment. “Some
water projects like water treatment, water storage and recycling
will see a considerable, even surprising, amount of private
activity,” he says. “The [Infrastructure Act] certainly
encourages both public and private investment in upgrading the
nation’s water infrastructure.” Mr. Marks also foresees
more airport deals, which often involve private investment and
activity.

To read his full commentary, read the Law360 article,
“$1T Infrastructure Package To Drive Big Work In
BigLaw” and the Institutional Investing in
Infrastructure article, “Infrastructure Week Becomes Reality: A
Meaningful Federal Legislative Effort To Address the Country’s
Flagging Infrastructure Is Law.” (Please note that a
subscription may be required for full access.)

Mr. Marks previously took a deep dive into some of the other key
provisions of the Infrastructure Act – including improvements
in the federal permitting process and a breakdown of new funding
for energy and other infrastructure programs – in an article
he published in Forbes: “Biden Signs Infrastructure Law: Here’s
How It Will Streamline $1 Trillion In Spending” right
when the law took effect.

Mr. Marks has also published another new article (co-authored
with Barry Gold) stepping back for a broader look at the historical
mismatch between available capital and the need for better
infrastructure in the United States. Among other key takeaways, the
authors note, “In contrast to a persistent belief that there
is insufficient capital available to fund new infrastructure
projects, in fact, there is ample public and private capital
available. That available capital is not fully deployed due to a
misalignment of costs and benefits, a lack of political will,
inefficient project selection, and a misplaced emphasis on low-cost
procurement that, together with underfunded budgets for operations
and maintenance, results in (a) development of infrastructure
without due concern for economic viability or positive
externalities, (b) a backlog of deteriorating infrastructure
projects needing repair or replacement, (c) higher lifecycle costs,
and (d) idle capital and higher costs.” Their article appears
in the Winter 2022 edition of the Journal of Structured
Finance: “Seven Myths About US Infrastructure,”
click here. (A membership with the Journal of
Structured Finance is required.)

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