Wall Street ready to bank on Trump’s infrastructure plan

By PoliticsFOXBusiness

Trump's infrastructure plan: Will private sector invest?

Rep. Claudia Tenney, (R-NY), on President Trump's budget proposal and infrastructure plan.

Wall Street firms are getting ready to cash in after President Donald Trump’s administration released an infrastructure plan that could turn out to be a boon to their companies’ bottom lines.

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Macquarie Capital, one of the first banks to invest in infrastructure projects around the world and likely a major benefactor of Trump’s proposal, seemed hopeful that this could be the beginning of future business opportunities while the administration calls for state and local governments to turn to private enterprises as a way to pay for upcoming infrastructure ventures.

“It’s a positive step and good that there is a recognition of the value and importance of the private sector in addressing the nation’s infrastructure,” Geoff Segal, government advisory and affairs manager at Macquarie, told FOX Business. “Further, the plan removes some barriers to asset recycling—perhaps the most impactful opportunity to raise new capital for infrastructure.”

The Trump infrastructure plan is scant in details about how $200 billion in federal funds will spur $1.5 trillion in investments. But for firms like Macquarie, the good news was not how much the federal government may cough up but the clear signal from the White House that private-public partnerships can still be a viable option as a way to help pay for future infrastructure needs.

Public-private partnerships have been part of the infrastructure industry for over a decade. With most of these partnerships, state governments turn to banks as financial advisers or investors in order to jump-start extensive projects such as bridges and toll roads.

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The financial sector, in most cases, can see a huge upswing in profit through the entire process because they can make millions off being an adviser, and when banks are investors they can have control over pricing when the final product is complete. For instance, a reconstructed toll road could see an increase in tolls in order for the investors, which at times can be banks, to start making a profit out of their original investment.

When it comes to Trump encouraging the use of the private sector as one of the ways to finance his audacious plan, White House officials are hoping Congress will dedicate $100 billion of the $200 billion in federal funds to the Infrastructure Incentives Program, which would “encourage increased state, local, and private investment in infrastructure,” according to the new outline.

The Business Roundtable, a group of Wall Street’s most powerful executives, including its chairman, JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon, was also celebrating on Monday as the infrastructure plan was unveiled.

“The plan released today by the Trump administration to renew America’s aging infrastructure is an important first step. Accelerating permitting processes and attracting private investment are critical components to fixing our roads, bridges, airports and seaports,” Michael Burke, chairman and CEO of AECOM (NYSE:ACM) and chair of the Business Roundtable Infrastructure Committee, said in a statement.

The members of the Business Roundtable that could see their businesses make a killing include Steve Schwarzman, the CEO of private equity giant Blackstone (NYSE:BX), which is reportedly seeking a $10 billion infrastructure fund, and Jim Umpleby, the CEO of Caterpillar (NYSE:CAT), an American Fortune 500 company that designs construction machinery.

Spokespeople for Blackstone and Caterpillar did not return requests for comment.

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