US ‘could end up like Europe’

From high up in his Park Avenue office, Christopher Lee’s view is spoiled by a few dark clouds – but these are economic dark clouds rather than anything meteorological.

“My biggest worry is that, at some point, the printing of money, low interest rates and the deficit will catch up with us. It doesn’t affect deals now but if we move up to high interest rates and we have inflation then infrastructure becomes riskier,” says Lee, founder and managing partner of fund manager Highstar Capital.

Highstar – whose fourth fund (and first since gaining independence from AIG in 2010) closed on $2 billion in May last year – is perhaps best known for its investments in energy infrastructure, a part of the market which Lee says is “as solid today as it was when started [in 2000]”.

But his insight into economic prospects comes in the wake of port investments which, by Lee’s admission, have made him more wary of GDP-related assets. “We bought at the top end and then the Great Recession came along and we learned a lot about GDP assets,” he says, adding that “we’ve sought to mitigate” the issues that arose.

An influential voice on behalf of infrastructure on Capitol Hill, Lee has never been one to fight shy of criticising politicians where he feels it’s justified. And, in the interview, he offers some candid views.

“My concern is that President Obama stops playing politics and understands that we can’t afford the current level of entitlements; and that the Republicans see that there has to be a safety net. That needs to be addressed or we’ll end up with the same problems as Europe. Each party is equally to blame,” he says.

But the view takes on a sunnier outlook when Lee talks about infrastructure deal flow. “The next year will be steady as we go. Deal flow is very strong. I’m very optimistic about the next few years. The next five years? I’m no pundit!”

The interview with Lee also covers his project finance background, dealings with AIG, his thoughts on public-private partnerships such as Luis Munoz Marin International Airport, and insights into Highstar’s strategy. 

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