A $1.45 billion public-private partnership to modernise a portion of Interstate 75 in Detroit, Michigan has reached financial close after the state’s department of transportation issued more than $600 million in private activity bonds.
Oakland Corridor Partners, a consortium of infrastructure companies leading the PPP, secured funding to rebuild, finance and maintain a 5.5-mile stretch of highway, according to a statement. John Laing Investment Limited and Aecom Capital are equity sponsors for the I-75 modernisation, which includes improving 28 bridges on the stretch of highway connecting the Detroit neighbourhoods of Hazel Park, Madison Heights and Royal Oaks.
Earlier this month, the Michigan Department of Transportation, through the state’s investment vehicle, the Michigan Strategic Fund, issued more than $600 million in private activity bonds to help finance the PPP.
The project is structured to reimburse Oakland Corridor Partners for its investment, construction and maintenance through availability payments. Payments will be made during the project’s five-year construction window and for a 25-year maintenance agreement.
MDOT opted to use a PPP to hasten an I-75 modernisation project it estimated would take another 10 years to build on its own. Last September, the transportation department finished the first leg of the project, but then issued a request for qualifications for private developers.
Financial close on I-75 follows an earlier procurement for the $2.68 billion Gordie Howe International Bridge, which will connect Detroit across the US-Canada border with Windsor. The Windsor-Detroit Bridge Authority arranged that procurement.
Transportation continues to be a key sector for North American institutional investors building out their infrastructure portfolios.
Earlier this year, the California Public Employees Retirement System, which has $4.3 billion invested in infrastructure, reported 20.6 percent net returns from the previous fiscal year with a portfolio that is 46 percent weighted toward transportation. The Alaska Permanent Fund Corporation’s $2.6 billion portfolio returned 22.9 percent as of 30 June, with transportation investments again making up the lion’s share of infrastructure assets at 41 percent.