Investors

Chicago infrastructure bank fine-tuned

Mayor Emanuel (pictured) bowed to a city council concern, agreeing to allow an alderman to sit on the board of the Chicago Infrastructure Trust. Citi, JP Morgan and Macquarie, which joined the Windy City in creating the venture, are expected to support the decision.

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A minor tweak to the Chicago infrastructure bank launched in March should deliver a sufficient enough compromise to appease a city council leery about backing the $1 billion plus undertaking.

Mayor Rahm Emanuel last week agreed to appoint an alderman to the board of the nascent Chicago Infrastructure Trust – a collaboration with Citibank, Citi Infrastructure Investors (CII), JP Morgan Asset Management (JPMAM), Macquarie Infrastructure and Real Assets (MIRA) and Union Labor Life Insurance Company, or Ullico, to channel up to $1.7 billion in private capital into Windy City infrastructure.

The city is expecting the appointment – politically motivated to appease aldermen that voiced concern about financial transparency and sensitivity to contracting women- and minority-owned businesses – will draw a muted response from its private investors.

“They are supportive of our ability to set up the trust properly,” Tom Alexander, assistant press secretary to Emanuel, told Infrastructure Investor. “They understand that every deal will be evaluated.”

Alexander said the city has not heard feedback from its private partners. Citi and Macquarie did not respond to Infrastructure Investor by press time. A spokeswoman for JPMAM declined comment.

The council pushed for the trust, which has a five-member board, to be a so-called open meeting, under city law. By and large, the city council expressed support for the decision to name an alderman to the board.

The unveiling of the Chicago Investment Trust marked a milestone in US privatisation, becoming the first state public-private partnership (PPP) institution.

Macquarie in 2004 took part in the first-ever toll road concession in the US in a deal for the Chicago Skyway, while CII in 2008 attempted to complete the first US airport privatisation for Midway International in Chicago, in a deal that failed after CII could not raise the needed capital.

The Clinton Foundation, established by former US President Bill Clinton, also helped finance the formation of the trust.