Private Placement Investors Eye P3 Pipeline

    April 2014

    The April 11, 2014, Debtwire Municipals article “Private Placement Investors Eye P3 Pipeline” quotes Squire Sanders P3 lawyer Roderick N. Devlin on the subject of institutional investors’ interest in the US P3 market. In the article Roddy notes that availability-based structures are of particular interest to institutional investors. According to him, these “long-term, steady and relatively low-risk payment structures” are attractive to such investors. He notes, however, that “the P3 procurement process has been a hindrance” to the more active involvement of institutional investors as “it requires each bidding team to include evidence of committed finance as part of its bid. Such a commitment must be open for a specified period of time.” According to Roddy it has been difficult for institutional investors to make this commitment, although he notes that at least one bidding team has attempted to bring institutional investors to the table for the initial closing on a deal.

    The article further quotes Roddy as saying that public procurement authorities and private sector sponsors could also make the P3 structure more inviting to institutional investors who “have come to expect certain representations, warranties, covenant, and legal opinion support,” different from those required by bank lenders. Procuring authorities and private sector players could encourage institutional investor participation, “both at the initial closing and in refinancing, by addressing such expectations upfront in the project and financing documents,” he added.