Xi Jinping, the Chinese president, has a passion for football. His desire to see China become a bigger player of the beautiful game has fed a ravenous demand for players, sporting gear and training facilities – and ultimately, stadiums. Whether this is the main driver behind the creation of the country's first sports-focused PPP fund this autumn is not known. But the $10 billion yuan ($1.4 billion; €1.3 billion) vehicle, seeded by Everbright Securities and Zhejiang Kunlun Holdings Group, attests to the attractiveness of the PPP structure in surprising places.
That was not a given. In Europe, the land where they first came to fame, PPPs have been eclipsed by the rise of renewables and used as a political football by those intend to single out their costs and their alleged mishaps. Industry insiders admit that primary opportunities have largely dried out and that dealflow is now mainly to be found in the secondary market. Tellingly, the latest listed vehicles to be established in the UK, the country where blue-chip PPP funds have been listed since the 2000s, are all focused on green energy(although that might change now that PFI got a mention in the recent Autumn Statement).
Yet advocates of the framework should not despair. First of all, PPP projects are still being closed in Europe, even if they do so away from the mainstream media's gaze. In October, for instance, a consortium led by the Netherland's DIF was awarded a €1.3 billion PPP to extend the A6 road in Germany, a country where PPPs have long carried a bad name. As we explore on p. 22, the Baltics, led by Lithuania, also offer a refreshing perspective on the PPP market. Meanwhile, some interesting secondary transactions are taking place, such as Infracapital Partners' acquisition of a €700 million pool of operational and greenfield Italian assets in May.
But PPPs are also gathering steam in a place where they have long been held back: the US. Consider Washington DC's first pipeline of projects, unveiled in October. The city lauded the framework as an “innovative solution” that could “create jobs, broaden prosperity, and serve residents and visitors alike”. Two other examples: the $4 billion revamp of LaGuardia Airport, the US' largest PPP, reached financial close in June; the five-part, $5.5 billion modernisation of Los Angeles Airport also includes two portions that will be procured as PPPs. While it is not yet clear whether Donald Trump's mooted infrastructure boost will result in a sustained pipeline, we find on pp. 23-24 reasons to be optimistic about the US regardless. At the same time, neighbouring Canada remains a champion of the scheme
And then there are the emerging markets. Latin America here has shown promise so far this year. Colombia has been forging ahead with its 4G roads programme, last month approving the 279km Caribe 2 project. In October, Sacyr won Paraguay's first PPP, a $520 million project that involves widening federal motorways that are part of the Pan-American Highway. As international markets welcome Argentina back to the fold, it is likely PPPs will also be used to entice overseas capital into a much needed infrastructure revamp. Good news is also coming from Asia: the Philippines last month allowed its PPP project companies to float. In Africa, DFIs are striving to roll out plug-and-play programmes that make PPPs easier to use and replicate.
Significant obstacles remain. As we explain on pp. 26-27, PPPs are not always well understood, with confusion as to who should bear the burden of their risk and liabilities. The lack of standardisation in markets ranging from Africa to the US also act as a drag on projects. And not every project can fit into a PPP framework anyway. But at a time when the public purse is tight and vast demand for infrastructure remains unmet, private expertise and money are precious assets. Perhaps the PPP game is only getting started.