A private infrastructure industry is emerging with a simple message to the public agencies that have traditionally dominated the industry: ‘allow us to provide a complete package of development services and we will deliver the facilities needed in less time and at little or no cost to the treasury.’ The pitch is compelling. Hundreds of projects costing billions of dollars have been completed using predominantly private capital in the last ten years. Most of the new investments created by unlocking private capital that have been built in developing countries where the potential benefits of modern infrastructure are the greatest.
Public-private partnerships help fill the “infrastructure gap” between infrastructure needs and in-place facilities by exploiting a previously untapped source of capital. Applying private capital to needed infrastructure allows the public sector to complete more projects sooner than would be possible using only scarce public resources, and to divert resources to other projects.
Including projects that having less ability to attract the private finance. For the private sector, investing in infrastructure projects is a potentially lucrative use for large blocks of capital. The public gains access to a higher capacity and in many cases more efficient infrastructure system.
In this manner, a government or municipality acquires at virtually no cost a facility that it would otherwise have had to finance, build, and maintain itself. When public-private partnerships provide infrastructure gratis that the government would have eventually had to finance through tax revenues or other fees, public-private partnerships replace taxation with privately collected user fees or other forms of remuneration to pay for the infrastructure.
Infrastructure assets, especially newly constructed assets, tend to be long-lived, require minimal maintenance, capital expenditure and are generally not subject to major technological change or physical deterioration. This generally means that significant cash flow is often available from infrastructure businesses to service debt, make distributions to shareholders or expand the business, or all three.
Project Types
Amadeus Capital is committed in building its exposure to a portfolio of high quality infrastructure projects that diversified across all sectors.
It seeks investment opportunities across emerging markets, but with a focus on emerging economies in Africa.
Amadeus Capital defines infrastructure as asset-intensive businesses providing essential services over the long-term, often on a regulated basis or with a significant component of revenue and costs that are subject to long-term contracts.
Amadeus Capital looks for infrastructure projects that: have a significant underlying asset base generate stable returns can create value primarily through optimization of capital structure with less of a focus on planned transformational and operational change than would typically be seen with a private equity asset are more resistant to economic cycles reflect inflationary trends demonstrate potential for material capital growth.
Examples of infrastructure project classes include:
Transport Infrastructure
- Toll roads, bridges, tunnels and road maintenance.
- Ports.
- Airports and Air Traffic Control.
- Rail.
- Ferries.
- Bus and light rail franchises.
Utilities
- Water treatment and distribution
- Electricity distribution.
- Power generation.
- Oil and gas distribution and storage.
- Waste processing.
- Communications infrastructure.
Social Infrastructure
Healthcare facilities.
- Education facilities.
- Judicial and correctional facilities.
- Government accommodation.