The White House budget presented in early May did not identify privatization of public assets as a strategy for leveraging some of the $200 billion in direct investment in infrastructure proposed by President Trump. Such deals are typically large, they’re being aggressively pursued by major investors, and deal flow could develop quickly with federal support, some believe. For those reasons, “all signs point to asset recycling as being the crown jewel of their (Trump’s) plan,” says a source.
As proposed, some share of the $200 billion would be set aside as discretionary grants to incentivize state and local governments to sell their airports, toll roads, water plants and other revenue-producing assets to the world’s largest investors. Up-front fees paid by investors would be used to upgrade acquired assets and/or recycled into modernizing state and local projects that don’t have their own cash flow.
John Schmidt, a Democrat, says the greatest challenge will be getting support from Democrats. To popularize the concept, the first such deal should recycle the proceeds into rebuilding a large number of schools or some other social infrastructure project, says Schmidt, a partner at Mayer Brown in Chicago, who advised Indiana and Chicago on their toll road concessions 10 years ago. (A benefit of schools is that they don’t require a NEPA review, he says, so could be built relatively quickly.)