Private financing of infrastructure reduces the capital raising constraints faced by publicly-owned infrastructure and utilities and lessens the burden and risk facing governments (especially where this financing is free of any government guarantees).
This does not mean to say that private financing necessarily involves private ownership – the challenge is for the entity to be financed on a stand-alone basis by private risk-based capital, without the need for government support. This is different from fully publicly-financed infrastructure in which government assumes all project risks (and ideally should be pricing for this when providing capital to public projects). Of course, “self-standing” private financing may not always be possible and in different contexts innovative funding and /or financing interventions may be required to alter the risk profile of the infrastructure project or company to make it investable or bankable.
In fact when considering the project life-cycle of infrastructure, from concept development through to initial financing of construction and potential refinancing (on better terms) once it is operational, the question quickly becomes one of when it is either possible and / or optimal to bring in private financing. Hence, very attractive opportunities may be auctioned off at the concept stage as the private sector is willing and able to compete for such opportunities. In other contexts, proof of concept may be required in successful operations before private finance becomes interested, for instance, because the technology, construction and other risks are perceived as being too high to attract private capital on a cost-effective basis, say from institutional investors such as pension funds.
All of the above will differ according to both project and context. CEPA has considerable experience of:
- assessing project funding and financing challenges (for the UK National Infrastructure Commission);
- assessing, developing and supporting project development processes (for the Infrastructure Consortium for Africa and the Private Infrastructure Development Group);
- reviewing the role of financing institutions (for the Global Infrastructure Hub);
- designing financing interventions (for the African Development Bank); and
- transacting the sale of operational assets.
The key contacts for our Infrastructure practice are...
To talk to someone about our experience in this sector, please call either +44 (0)20 7269 0210 for the UK, or +61 2 9006 1308 for Australia.View our entire Infrastructure team
Infrastructure News & insights
CEPA recognised as one of the UK’s leading management consultants
Following another year of providing high-quality advice to our clients across our core sectors, we are grateful for the positive feedback from the market, which has led to CEPA’s inclusion in the Financial Times’ independent ratings report.
New infrastructure investment approach to benefit millions across the Pacific region
A guide for institutional investors about co-investment options in infrastructure, developed by CEPA Australia, has been published.
The new Build Back Better (B3W) initiative
In light of the recent announcements from the G7 regarding the B3W initiative, we have prepared a briefing note that focuses on how G7 countries can mobilise private finance for infrastructure in lower and middle income countries.
A new approach to the financing of public infrastructure
A major impact of COVID-19 has been a significant increase in the amount of borrowing by the UK government. This will likely have reduced the fiscal headroom available to the government to deliver its desire to ‘level up’ through an expansive infrastructure programme.
African Development Bank (AfDB) launches report to support investment into the African energy sector
AfDB and the Sustainable Energy Fund for Africa commissioned a consortium led by CEPA, to assess the availability of local currency finance for sustainable energy projects and the obstacles developers face in tapping into local financial and capital markets.
Global Infrastructure Hub publishes guidance on infrastructure banks
Guidance has been published to assist governments interested in establishing, or reforming, a national infrastructure bank or a similar financing facility.
A guidance tool for National Infrastructure Banks and related facilities
We developed a reference tool which examined areas where National Infrastructure Banks could play a catalytic role.
Mobilising finance for infrastructure in Sub-Saharan Africa & South Asia
Our research for DFID highlighted the need for public institutions to create bankable infrastructure projects to unlock funds available from the private sector.
Financing UK infrastructure
Our review of private financing for infrastructure contributed to the national infrastructure debate on what role the public and private sectors should have in developing...
Strategic support to the Private Infrastructure Development Group
We advised the Private Infrastructure Development Group (PIDG) to focus on addressing project development constraints and facilitate local currency finance under its new Five-Year Strategic Plan.
Global Infrastructure Hub Consultation
A draft guidance note developed by the Global Infrastructure Hub in collaboration with CEPA, has been published for consultation.
Airport capacity strategy
CEPA’s contribution to this study on delivering the future airport capacity requirements in Ireland for the Irish Department of Transport, Tourism and Sport set out the decisions Ireland has to make - and the timing - to come to a good decision on the future capacity requirements of Dublin Airport.