More private companies to jump on infrastructure bandwagon

Read Express-News Reporter Pat Driscoll’s blog.

Note: Carlyle Group is affiliated with Citigroup who regularly attends the Alamo Regional Mobility Authority (tolling authority) board meetings.

The privatization bandwagon
March 20, 2006
By Pat Driscoll

Foreign companies aren’t the only ones interested in buying U.S. roads, rails, ports and other assets.

Does Carlyle Group sound familiar?

The Washington-based firm, formed in 1987, is known for its defense investments and connections to the Bush family and other high-level officials worldwide (as investors, employees or advisors).

But just how American a high-stakes financial company can be in an increasingly global economy is a good question.

Until shortly after the 9-11 terrorist attacks, investors in the Carlyle Group included family members of Osama bin Laden, according to media reports. The word lately is that the United Arab Emirates is an investor. UAE owns Dubai Ports World, whose bid to operate almost two dozen U.S. ports unleashed a political firestorm.

Anyway, Carlyle has started raising money to invest mostly in U.S. infrastructure, in transactions ranging from $100 million to more than $1 billion, the firm said.

The fund is the first of its size that’s focused on U.S. assets, Dow Jones Newswires reported.

Also, from the Dow Jones story, Carlyle and me:

•The U.S. needs an estimated $1.6 trillion over the next five years to replace and expand its roads, rail lines and other infrastructure, according to the American Society of Civil Engineers. Since 1995, more than 20 states enacted laws to allow private companies to take over the financing, construction and operation of public infrastructure.

•Barry Gold of Citigroup will co-head the new Carlyle fund. He led the financing of the Chicago Skyway, Toronto’s Highway 407 and California’s State Route 91. Cintra SA of Spain and Macquarie Infrastructure Group of Australia, companies competing to take over 47 miles of planned toll roads in San Antonio, bought the Skyway operation and Cintra gets half its earnings from Highway 407.

•U.S.-based Goldman Sachs is also raising an infrastructure fund, but one with a global focus. This is the firm that stands to collect about $20 million in fees in a deal to lease the Indiana Toll Road to Cintra and Macquarie.