‘80% completion rate for US transport PPPs’

Since 2005, 22 of 28 announced transportation transactions have successfully reached financial close, a ‘substantially higher [completion rate] than most market participants realise’, Greenhill’s Andrew Deye (pictured) highlighted at Infrastructure Investor Americas 2011.

Panellists at the Infrastructure Investor Americas 2011 conference, held in New York last week, were “optimistic” about forthcoming deal flow in the infrastructure sector. Market and policy challenges persist, but dealmakers are steadfast and investors are engaged.

Moreover, participants stressed that infrastructure has a solid track record to build from and, with the support of policymakers and working models to emulate, the pace of deals could pick up.

Andrew Deye, part of the infrastructure banking group at Greenhill & Company, pointed out that, by one measure, there have been 28 announced transportation concessions in the US since January 2005, when the landmark $1.83 billion Chicago Skyway concession closed.

“Importantly, 22 of the 28 PPP [public-private partnerships] transactions since 2005 have closed,” Deye told Infrastructure Investor. “While six transactions have not reached financial close [after reaching a formal deal announcement] the implied completion rate of nearly 80 percent is substantially higher than most market participants realise,” he stated.

That track record could be bolstered by strong bank appetite for quality deals, Alec Montgomery, head of infrastructure North America at Industry Funds Management, highlighted. Notwithstanding the current limited deal activity, Montgomery argued that those deals that do come to market appear to be readily financed, despite the present state of the bank sector.

“When good deals come to market, it’s all hands on deck, and deals such as the Puerto Rico Interstate-22 [Jose de Diego Expressway] become oversubscribed,” he said.