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DealZone

Behind the deals and deal-makers

May 28th, 2008

Wanted: infrastructure bankers

Posted by: Megan Davies
Tags: DealZone

turnpike.jpgM&A may be in a slump but there’s one area where more dealmakers are wanted: infrastructure.

“One thing we need in this market is more dealmakers - motivated dealmakers,” John Schmidt, partner at law firm Mayer Brown, told Reuters. “Investment bankers, when they go out motivated by the desire to do a deal, talk and educate people and say here’s what you can get. More people doing that can have an impact.”

Schmidt, who focuses on transport infrastructure, said the infrastructure sector is ripe for more private equity involvement, despite investments typically reaping lower returns (11-12 percent) than the 20 plus percent that buyout firms target.

Infrastructure has recently taken off as an investment in the US, taking its lead from decades of privatizations overseas. One recent asset on the block, the Pennsylvania Turnpike, drew a $12.8 billion bid from a consortium led by Spanish infrastructure firm Albertis. In the past few months, billions of dollars have been raised - with more coming - to invest in the sector.

Schmidt estimates that the value of toll roads, bridges and airports that could be privatized in the U.S. could add up to half a trillion dollars — about the same amount that has been, or is being raised. Whether or not that amount of deals happens is another issue, but private equity involvement is only going to boost it.

“I think private equity will be increasing players (in the sector),” Schmidt said. “They have the skills, the motivation. I think they bring a lot to the table. It is not just the intellectual, but the temperamental skill. They’re used to doing big deals and working on them for a long time - they bring a dealmaking intensity that can help the market. I think they’ll be major players.”

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