Investing in Infrastructure . Texas Senate Committee on Transportation and Homeland Security . JULY 22, 2008. Pension Consulting Alliance, Inc . . Infrastructure Sectors . What is Infrastructure?.
Texas Senate Committee on Transportation and Homeland Security
JULY 22, 2008
Pension Consulting Alliance, Inc.
What is Infrastructure?
History of Infrastructure
Why Invest in Infrastructure?
Demand for Infrastructure
Source: American Society of Civil Engineers
Private vs. Public-Private Partnerships
Existing Services and Facilities
Public-Private Partnership versus Issuing Public Debt
Source: Carlyle Group/American Society of Civil Engineers, Views and Estimates of the US Congressional Committee on Transportation and Infrastructure for 2005
Illustrative Investment Performance
Source: JPMorgan Asset Management
Things That Can Go Wrong
Pension Plan Benefits of Infrastructure
Attractive risk adjusted returns
Low beta relative to traditional asset classes Portfolio diversification
Long lived assets to match liability duration 25 to 99 year cash flows
Regulation or concession within pricing
Inelastic demand and monopolistic position supports stable cash flows
Via partnership arrangements risks transferred to subcontractors or back to public entity
Limited exposure to economic downturns
Next Steps for Investing in Infrastructure
Infrastructure as an Emerging Asset Class