Carlyle principal urges investors to shape infrastructure debate

A senior executive at the world’s largest private equity firm issued a call to arms to investors, urging them to get involved in the debate about private investment in infrastructure at a critical time for the development of the public-private partnership (PPP) market in the US.

“There has never been a more critical time in deciding how private investment will be involved in transportation policy than now,” John Flaherty, principal at global buyout firm The Carlyle Group, said to delegates gathered at the Public Private Partnerships USA Summit in Washington DC.

“I would strongly urge your companies to get involved in this discussion. You should be a part of defining it and determining it,” he added.

Flaherty told the audience of fund managers, consultants, engineers and others involved in the US’ nascent PPP market that they have a window of opportunity to shape the debate thanks to a shift in political discourse surrounding this often controversial form of public service procurement.

“The reality is that a year ago . . . we were faced with federal legislators threatening to  withdraw PPPs and now the consensus is that some form of PPPs needs to be included in the reauthorisation bill,” Flaherty said.

The upcoming reauthorisation of the US’ surface transportation bill, which will decide how federal funds for infrastructure projects are raised and allocated, is expected to  encourage the use of PPPs and other private sector-friendly measures.

Flaherty said the shift in political discourse was brought about by the change in presidential regimes  –  with the Obama administration looking for new ideas for infrastructure financing – coupled with an economic crisis that squeezed state budgets and a stimulus bill that brought attention to the need for infrastructure investment.

He cautioned, though, that while he is hearing “critical comments about the creation of our market over the next several years” from politicians, the private sector has not yet made its voice heard.

“Us as a private sector group, us as transportation or infrastructure investors, we are not at that table,” Flaherty said, again urging investors to make their voices heard in the upcoming reauthorisation debate.

Previously the chief of staff in the US Department of Transportation under former Transportation Secretary Norman Mineta, Flaherty pursues investments in infrastructure for Carlyle’s $1.15 billion global infrastructure buyout fund. He is based in the firm’s Washington, DC office.