Private Sector Capital Strategies for Public Service Infrastructure

Abstract

Global public service infrastructure faces the competing demands of age, capacity and economic headwinds. The aging infrastructure of Western economies needs upgrading – just as challenging economic conditions bring government spending and deficit measures to a head. And the inadequate infrastructure of emerging markets is in desperate need of expansion, putting a strain on available resources. For many strategic buyers and financial sponsors, the shortage of not only capital, but also capabilities and talent, makes public service infrastructure, and its entire supply chain, an interesting business opportunity that spans a wide spectrum of industry verticals. These represent significant growth markets with an attractive risk profile. Ultimately, participation in these plays might be as vendors, investors, business partners, or in the form of an M&A transaction. The fundamentals can be compelling for those who can bring to the table, the requisite capital, capabilities, or talent. This working paper addresses the key design elements of financial strategy & policy for public service infrastructure, including: sizing the need, types and sources of capital, capital structure, ownership structure, and operating model.