Global Projects Blog tag:crgp.stanford.edu,2012:/news//15 2012-05-07T22:26:33Z Movable Type 4.32-en 90% of Infrastructure Investors are Direct tag:crgp.stanford.edu,2012:/news//15.4545 2012-05-07T20:54:55Z 2012-05-07T22:26:33Z ashby 90 percent of infrastructure investors make direct investments in the asset class. That's a lot! But there's a slight problem with all this enthusiasm for direct investing: It is incredibly hard to do. The governance and management hurdles are extremely high. And that's precisely why we launched our direct investment research project a little over a year ago! You can read some of our work in this area here and here.  ]]> ]]> US Infrastructure Investment 'Obviously Sensible' tag:crgp.stanford.edu,2012:/news//15.4533 2012-03-28T18:37:28Z 2012-03-28T18:41:35Z According to The Economist, investing in American infrastructure is an absolute no brainer: "If ever there should have been a policy so obviously sensible as to attract bipartisan support, more money for infrastructure was it. Right now, when it comes... ashby According to The Economist, investing in American infrastructure is an absolute no brainer: "If ever there should have been a policy so obviously sensible as to attract bipartisan support, more money for infrastructure was it. Right now, when it comes to partisan politics, sensibility's got nothing to do with it." So true. ]]> How Failing Infrastructure Affects Our Economy tag:crgp.stanford.edu,2012:/news//15.4525 2012-03-16T14:48:46Z 2012-03-16T14:57:51Z ashby Eric Spiegel is President and CEO of Siemens Corporation. He recently gave an interesting interview to Harvard Business Review on the link between economic innovation and infrastructure investments. Here's a blurb: 

"We're now ranked 23rd in the world in terms of infrastructure... The age of our country's coal plants averages in the 40-year range, with a number of plants at the 50-60 year mark. And our electric grid is behind other countries... Take a look at the transportation network. Siemens developed a train in 1903 that would go 150 miles per hour; now we're manufacturing trains that go 230 miles an hour. But in the U.S., trains rarely get above 100 miles an hour because the tracks and control systems are so old. In Germany, they run light rail, medium-speed rail, high-speed rail, and freight rail all on the same tracks, using sophisticated control technology to move trains on and off the tracks. We're way behind...Then there's the aging water infrastructure. When a pipe burst in Vermont, the mayor said, "That pipe's been here since the war." Senator Bernie Sanders who was visiting the small town asked, "What war?" The mayor said, "The Civil War"... Those are just three big examples of how we're running behind. And it has had a big impact on the competitiveness of the country." 

He goes on to explain the link between infrastructure, competitiveness and innovation. It's worth a read. Get the entire interview here. It's worth a read. 
]]> The Scope of Financial Institutions: In-Sourcing, Outsourcing, and Off-Shoring tag:crgp.stanford.edu,2012:/news//15.4523 2012-03-14T20:06:40Z 2012-03-14T20:10:20Z In general terms, my academic research is focused on how institutional investors are organized, how they coordinate their activities, and how they intersect with the market for financial services. Why do I find this so interesting? Because these investors, today,... ashby
Anyway, with this in mind, one of my current research projects at the CRGP is focused on the pros and cons, constraints and drivers, and principles and policies of in-house asset management at institutional investors. And, as part of this project, frequent co-author Gordon Clark and I have recently completed a draft working paper that outlines some of the theoretical foundations of internal asset management. The paper is entitled "The Scope of Financial Institutions: In-Sourcing, Outsourcing, and Off-Shoring." At issue in this paper is the degree to which institutional investors internalize the tasks and functions necessary to be effective investors. Here's a blurb...
]]> "... we explain the nature of the governance problem in large and small financial institutions. Likewise, we explain how and why those that produce financial returns have distinctive claims for compensation and advantage in their own right. On this basis, utilising our characterisation of the strategic assets of financial institutions, we explain the logic behind in-sourcing and outsourcing and, ultimately, the geographical reach of financial institutions. Whereas the logic behind in-sourcing and outsourcing may be familiar, we suggest that offshoring or the geographical reach of financial institutions is intimately related to their location in the global hierarchy of financial centres. Indeed, quite unlike conventional models of the firm, which treat the market for services as ubiquitous, in our formulation it matters a great deal where financial institutions are located relative to national and global financial centres." 

Caveat lector: It's quite a conceptual paper. But (!) it does have lots of practical relevance beyond the academy. For example, here's some stuff that's probably of interest to everybody: 

"...in-sourcing depends upon (1) being able to allocate resources to a select number of functions which can meet or better the costs-of-provision of those same tasks and functions in the market for financial services. In-sourcing also depends upon (2) being able to recruit the requisite human capital to realise the performance objectives of those functions in relation to the overarching strategic asset allocation framework. And finally, (3) in-sourcing depends upon a governance budget consistent with those functions complemented by an appropriate system of information infrastructure for facilitating institution-wide oversight and control. Investment in human capital and infrastructure is consistent with ensuring the long-term sustainability of in-sourcing policies." 

Anyway, I hope you enjoy the paper. (Or, if you're like me, the introduction...then the conclusion...then the bibliography...potentially, if the paper looks really good, the sections in the middle...and the charts at the back.)
]]> Chicago Infrastructure Trust: A Step toward Localized Infrastructure Banks? tag:crgp.stanford.edu,2012:/news//15.4521 2012-03-08T19:42:14Z 2012-03-08T19:44:54Z By George Carollo, Stanford University Last week, Chicago mayor Rahm Emanuel announced, alongside Bill Clinton, the Chicago Infrastructure Trust. The idea is that the Trust will leverage private investment for retrofits and improvements. Although the Trust has a lot of... ashby Last week, Chicago mayor Rahm Emanuel announced, alongside Bill Clinton, the Chicago Infrastructure Trust. The idea is that the Trust will leverage private investment for retrofits and improvements. Although the Trust has a lot of political support, it is still pending City Council approval. Additionally, Chicago's long list of political mix-ups has many skeptics wondering if an infrastructure bank is an appropriate step for the city. Emanuel is pitching the Trust as a job creator, an investment to make Chicago competitive, and a move toward environmental sustainability. Emanuel claims that the Trust will create thousands of jobs by putting construction workers back into the field. Additionally, Emanuel and supporters believe that investing in infrastructure will modernize the city and make it more attractive to businesses. Furthermore, many of these infrastructure projects will focus on environmental sustainability. The Trust's first proposed project targets energy inefficiencies. The Trust would invest approximately $200 million in energy upgrades to create a revenue stream of an estimated $20 million annually. ]]> The Trust will leverage the expertise of some of the most influential names in project finance. Potential investors include Citibank, N.A., Citi Infrastructure Investors, Macquarie Infrastructure and Real Assets Inc., J.P. Morgan Asset Management Infrastructure Investment Group and Ullico. However, these equity investors will require high returns if they are to actually invest in a project. Since infrastructure assets do not typically generate high returns by themselves, the Trust will likely have to entice them with inexpensive debt financing. In exchange for the small returns the Trust will make, the equity investors will offer their financial knowledge and resources to the project. Because the equity investors will drive the projects, the Trust will benefit from low overhead costs. As long as the incentives are properly aligned, both parties should benefit.
The materialization of the Trust is still contingent on the City Council's approval; however the outlook appears favorable as the Trust has a lot of political support. If Chicago is able to raise funds for the Trust, the initiative could have far-reaching repercussions. Many large cities will likely follow suit, and the United States may replace the notion of a national infrastructure bank with the development of smaller regional or city infrastructure banks.]]> Chicago Infrastructure Trust: A Step toward Localized Infrastructure Banks? tag:crgp.stanford.edu,2012:/news//15.4519 2012-03-08T19:42:14Z 2012-03-08T19:44:19Z By George Carollo, Stanford University Last week, Chicago mayor Rahm Emanuel announced, alongside Bill Clinton, the Chicago Infrastructure Trust. The idea is that the Trust will leverage private investment for retrofits and improvements. Although the Trust has a lot of... ashby Last week, Chicago mayor Rahm Emanuel announced, alongside Bill Clinton, the Chicago Infrastructure Trust. The idea is that the Trust will leverage private investment for retrofits and improvements. Although the Trust has a lot of political support, it is still pending City Council approval. Additionally, Chicago's long list of political mix-ups has many skeptics wondering if an infrastructure bank is an appropriate step for the city. Emanuel is pitching the Trust as a job creator, an investment to make Chicago competitive, and a move toward environmental sustainability. Emanuel claims that the Trust will create thousands of jobs by putting construction workers back into the field. Additionally, Emanuel and supporters believe that investing in infrastructure will modernize the city and make it more attractive to businesses. Furthermore, many of these infrastructure projects will focus on environmental sustainability. The Trust's first proposed project targets energy inefficiencies. The Trust would invest approximately $200 million in energy upgrades to create a revenue stream of an estimated $20 million annually.
The Trust will leverage the expertise of some of the most influential names in project finance. Potential investors include Citibank, N.A., Citi Infrastructure Investors, Macquarie Infrastructure and Real Assets Inc., J.P. Morgan Asset Management Infrastructure Investment Group and Ullico. However, these equity investors will require high returns if they are to actually invest in a project. Since infrastructure assets do not typically generate high returns by themselves, the Trust will likely have to entice them with inexpensive debt financing. In exchange for the small returns the Trust will make, the equity investors will offer their financial knowledge and resources to the project. Because the equity investors will drive the projects, the Trust will benefit from low overhead costs. As long as the incentives are properly aligned, both parties should benefit.
The materialization of the Trust is still contingent on the City Council's approval; however the outlook appears favorable as the Trust has a lot of political support. If Chicago is able to raise funds for the Trust, the initiative could have far-reaching repercussions. Many large cities will likely follow suit, and the United States may replace the notion of a national infrastructure bank with the development of smaller regional or city infrastructure banks.]]> A National Infrastructure Bank: Why or Why Not? tag:crgp.stanford.edu,2012:/news//15.4515 2012-03-05T21:07:41Z 2012-03-05T21:15:37Z By George Carollo, Research Assistant at CRGPPresident Barack Obama included the formation of a National Infrastructure Bank in his most recent 2013 budget proposal. Obama first proposed the bank last fall but could not find enough support for it on... ashby
President Barack Obama included the formation of a National Infrastructure Bank in his most recent 2013 budget proposal. Obama first proposed the bank last fall but could not find enough support for it on Capitol Hill. The issue is still a divisive one in the House and Senate. According to Democratic Representative John Yarmuth, "It puts American workers back on the job building our roads and bridges, and it opens the door for public-private partnerships by creating an infrastructure bank." Yet Senate Minority Leader Mitch McConnell calls it "bad for job creation, bad for seniors, and...will make the economy worse." This being a presidential election year, the political stakes are high for all Congress people as well as the President. In this brief post, I first present some basic info on infrastructure banks and then consider the pros and cons...

]]> What is an Infrastructure Bank? 
The European Investment Bank (EIB) is a good example of a National Infrastructure Bank, and an example that some American plans have been modeled after. The EIB makes large, direct loans to projects that improve infrastructure, including loans to transportation, clean energy, health, and education. Prospective borrowers, who come from both the private and public sectors, must submit a detailed proposal describing the project's feasibility, its ability to repay the loans, a list of other funding sources and its value in fulfilling EU policy objectives. A panel of experts then determines whether the project should receive EIB financing, which can pay for up to half of a project's cost. The money usually comes from private investors and all of it has to be repaid with interest. Because the EIB does not seek to maximize profits, borrowers pay low interest rates, close to the EIB's cost of raising the money. The bank is able to raise money at very low interest rates due to its government ownership and sound finances. It has helped fund high-speed rail in Spain, an expressway in Poland, and electrical wires in Hungary. 

Why should we have one? 
  • Infrastructure banks are sustainable and do not depend on taxes. 
  • A national infrastructure bank would help move private capital, now sitting on the sidelines in pension, private equity, sovereign and other funds, into improving our crumbling infrastructure. 
  • Experts, including engineers, economists and bankers, will run the bank and will be able to make informed decisions as to whether a project should or should not receive funding. Therefore, politics will play a significantly less important role in determining what project should receive funding. 
  • Theoretically, this independently-run infrastructure bank would finance only meritorious projects. 
  • The bank would have the ability to leverage the government's guaranteed bonding capabilities, thereby reducing the cost of capital. 
  • An infrastructure bank would not endanger taxpayer money, because under the Federal Credit Reform Act of 1990, it would have to meet accounting and reporting requirements and limit government liability. 

Why shouldn't we have one? 
  • There are large initial costs in setting up a bank. 
  • The bank would not actually directly fund investment in infrastructure; rather, the private sector would assume the responsibility of directing investments. 
  • Many Americans are opposed to increasing the size or strength of the government. 
  • Some argue that it is the role of the Departments of Transportation, Housing and Urban Development, and Department of Energy to manage and fund infrastructure projects. Therefore an infrastructure bank is redundant.
]]> Africa in Need of Creative Infrastructure Financing tag:crgp.stanford.edu,2012:/news//15.4513 2012-02-26T04:26:02Z 2012-02-26T04:30:45Z In a recent interview, Andrew Berg of the IMF's Research Department suggests that Africa could benefit from some creative infrastructure financing. I wonder, has Mr. Berg seen Sokoni?... ashby In a recent interview, Andrew Berg of the IMF's Research Department suggests that Africa could benefit from some creative infrastructure financing. I wonder, has Mr. Berg seen Sokoni? ]]> CalSTRS Invests in Infrastructure to Match Liabilities tag:crgp.stanford.edu,2012:/news//15.4509 2012-02-14T15:42:16Z 2012-02-14T15:49:55Z By George CarolloOn Thursday, February 2nd, the Teachers' Retirement Board of the California State Teachers' Retirement System (CalSTRS) voted to lower their investment return assumption from 7.75 to 7.5 percent. This is the second time in 14 months the board... ashby On Thursday, February 2nd, the Teachers' Retirement Board of the California State Teachers' Retirement System (CalSTRS) voted to lower their investment return assumption from 7.75 to 7.5 percent. This is the second time in 14 months the board has lowered the assumed rate of return. As a result CalSTRS currently has $56 billion in unfunded liabilities. Five days later, on Tuesday, February 7th, CalSTRS announced a $500 million investment in infrastructure. The confluence of these events is significant for two reasons... ]]>
First, because CalSTRS, a mammoth in the public pension fund arena, is beginning to invest in infrastructure. It is worthy to note that pension funds, as particularly risk-averse investors, do not often branch out into sectors that are new to them, as CalSTRS as done here. Second, because CalSTRS decreased their target rate and has substantial unfunded liabilities, they are looking to infrastructure investment as a possible solution. 

CalSTRS, with a portfolio valued at $144.8 billion as of December 31, 2011, is the largest teacher pension fund and second largest public pension fund in the United States. CalSTRS administers a hybrid retirement system, consisting of a traditional defined benefit, cash balance and defined contribution plan, as well as disability and survivor benefits. The system serves California's 856,000 public school educators and their families from the state's 1,600 school districts, county offices of education and community college districts. Historically, portfolio is focused in global equity and fixed income asset, which represent 49% and 19% of their holdings respectively. 

 CalSTRS sees this move toward infrastructure investment as not only a necessary step toward diversification and steady earnings, but also as an investment in a job-generating sector that will help heal our troubled economy. According to Diloshini Seneviratne, a portfolio manager at CalSTRS, "Infrastructure is an asset class that provides diversification and is an inflation hedge." She says the pension fund is increasing its focus on the area and eventually will make its own investments, rather than just with funds. The recent economic crisis combined with insecurity in global markets has meant incredible jumps in returns for CalSTRS. Their portfolio earned a 2.3 percent return in 2011, down from 12.7 percent in 2010. As a patient long-term investor, CalSTRS views infrastructure as the diversification that could help keep returns steadier and more predictable. 

What's more, investment in infrastructure is an investment in the lives of workers and their families. Chairman of the CalSTRS Investment Committee, Harry Keiley, stated that "this type of investment aligns our goals...with both the jobs generation and infrastructure improvement our economy needs." Teachers would not be the only ones benefitting from investment in regulated utilities and transportation infrastructure. The American economy and its crumbling bridges and roads could use this additional shock to the heart to spur nationwide progress and prosperity. 
]]> Obama Emphasizing Infrastructure tag:crgp.stanford.edu,2012:/news//15.4497 2012-01-30T21:55:26Z 2012-01-30T22:01:26Z During the State of the Union Address, US President Obama emphasized the importance of infrastructure investment in bolstering the American economy. Specifically, he proposed using half of the money being saved from defence budget cuts to be put towards rebuilding... ashby emphasized the importance of infrastructure investment in bolstering the American economy. Specifically, he proposed using half of the money being saved from defence budget cuts to be put towards rebuilding the nation's infrastructure. Here's a blurb: 

]]> "So much of America needs to be rebuilt. We've got crumbling roads and bridges. A power grid that wastes too much energy. An incomplete high-speed broadband network that prevents a small business owner in rural America from selling her products all over the world. 

During the Great Depression, America built the Hoover Dam and the Golden Gate Bridge. After World War II, we connected our states with a system of highways. Democratic and Republican administrations invested in great projects that benefited everybody, from the workers who built them to the businesses that still use them today. 

 In the next few weeks, I will sign an executive order clearing away the red tape that slows down too many construction projects. But you need to fund these projects. Take the money we're no longer spending at war, use half of it to pay down our debt, and use the rest to do some nation-building right here at home.
]]> Dear Pension: Can You Please Pay For My Infrastructure? tag:crgp.stanford.edu,2011:/news//15.4469 2011-11-28T23:38:18Z 2011-11-28T23:45:36Z We knew this day was coming. Western governments have finally come to recognize that they: 1) are broke; 2) are unable to repair (or build) their dilapidated (or non-existent) infrastructure; 3) are looking for ways to spur domestic growth (i.e.,... ashby We knew this day was coming. Western governments have finally come to recognize that they: 1) are broke; 2) are unable to repair (or build) their dilapidated (or non-existent) infrastructure; 3) are looking for ways to spur domestic growth (i.e., by investing in infra); and 4) are increasingly keen to tap into the $70 trillion sitting in the world's institutional investors. Here are some of the most recent examples:
  • New York says it wants its pensions to finance bridges. 
  • The UK wants its pensions to build roads and railways. 
  • And China, for its part, doesn't want to miss out on all the infrastructure goodies that will undoubtedly be privatized over the coming few years. 
So perhaps we'll finally see the massive wave of privatization of infrastructure assets that some have been expecting? No doubt the pension funds would be quite keen on this, as they like the asset class (for a variety of reasons). Indeed, all the people rattling on about 'win-win' situations with respect to infrastructure needs and pensions' interest in infrastructure...are right! 

But, sadly, that doesn't mean investors will jump at any of these new opportunities to invest in infrastructure. Why? Because the problem isn't the appetite these funds have for the asset -- the problem is a lack of viable and effective ways to access the asset class. Put simply, there is no easy mechanism (for now) that allows long-term investors to invest in infrastructure in a fully aligned and cost-effective way. It simply doesn't exist. 

Even the new Osborne plan in the UK seems a but murky on the issue of access; the news articles I saw simply said that the country would try to unlock pension assets for infrastructure in the same way the Canadians have done. For real? So does that mean we can expect the UK to help their pension funds develop large in-house teams with high levels of expertise (and high salaries) in order to make direct investments? Because if this isn't the plan, then the UK's not really doing what the Canadians did. 

Anyway, whatever the case, this is a step in the right direction. But ultimately this discussion will have to be redirected towards the mechanisms to facilitate "easy and direct access". Stay tuned.
]]> Unlocking Capital for African Infrastructure tag:crgp.stanford.edu,2011:/news//15.4467 2011-11-22T23:27:39Z 2011-11-22T23:30:42Z Africa needs infrastructure. In 2006, which is the latest year for which we have data, the gap between infrastructure needs and infrastructure funding on the continent was something on the order of $48 billion. Finding mechanisms to fill this gap... ashby
Enter Sokoni Africa Infrastructure Marketplace, which is a new technology platform that was recently endorsed by the G20. Sokoni offers a virtual marketplace to bring buyers and sellers of African infrastructure projects together - all to the benefit of Africa! Sokoni is the brainchild of two people: Bobby Pitman of the African Development Bank and Ryan Orr of the Zanbato Group (and Stanford). Given that I share an office with Ryan at Stanford (when he isn't off solving the world's infrastructure problems), I rang him up to get the scoop on Sokoni. Here's our (distilled) conversation: 


]]>
Ryan: I think it was actually quite simple. Bobby and I saw the gap between infrastructure spending and need in Africa. We felt a technology platform could be a catalyst for investments in infrastructure. Sokoni is what we came up with; it's all about reducing complexity, minimizing transaction costs, and making pertinent information more easily discoverable. In a nutshell, this platform looks to enhance efficiency, transparency, and connectivity with a view to mobilizing and unlocking capital for Africa's infrastructure. Bobby hopes to have a similar impact with this infrastructure initiative as he had with his debt relief initiative when he was at the US Treasury. I think we can do it. 

Ashby: And the G20 endorsement? How did that happen? 

Ryan: Back in 2010, the G-20 created a panel of high profile individuals with expertise in private investment and infrastructure development to provide recommendations back to the G20 leadership on ways to scale up and diversify financing for infrastructure around the world. Sokoni fit the bill. 

Ashby: What do you think made Sokoni stand out? 

Ryan: It's got backing from the AfDB, Stanford University and some of Silicon Valley's choosiest venture capitalists. So you could say it already had endorsements from the best minds of development, infrastructure and technology. The G20 endorsement was an extension of the hard work Bobby and I have been putting in to get this platform up and running. 

Ashby: Can you take me back through how Sokoni fits with your company Zanbato? 

Ryan: About 18 months ago, I founded Zanbato to build a highly sophisticated digital platform that would help governments, firms and advisers promote their infrastructure opportunities. Zanbato is the engine for the Sokoni platform; it's the technology underpinning Sokoni. 

Ashby: And how's it going with Zanabato? 

Ryan: Well, we're just closing our series B financing. We've got a warehouse with 25 people working furiously to launch these marketplaces around the world. And we're hoping to be at 50 people by mid 2012. In all honesty, we think we're going to revolutionize the infrastructure marketplace and, in so doing, unlock new pools of capital for infrastructure projects. Today, our priority is Sokoni. But we're ready for more marketplaces. 

Ashby: Final thoughts? 

Ryan: I'm just really excited to have a strong partnership with the African Development Bank, and I'm hopeful that by applying Silicon Valley technology to this problem we'll mobilize more capital for African infrastructure! 

Ashby: Good luck!
]]> G20 Endorses Tech Platform For Infra Investing tag:crgp.stanford.edu,2011:/news//15.4459 2011-11-07T20:07:39Z 2011-11-07T20:14:32Z ashby formally endorsed a new technology platform that will provide a marketplace for buyers and sellers of African infrastructure investment opportunities. The platform (which is being developed by Stanford alumni) enhances the speed and efficiency of asset sales and capital raises by using technology to facilitate the work of those looking to finance African infrastructure assets, as well as potential donors and global capital providers interested in investing in Africa. Congratulations to the Sokoni team on a remarkable acheivement! 

]]> US Administration Expects Infra Deal Before 2012 tag:crgp.stanford.edu,2011:/news//15.4439 2011-10-13T18:41:50Z 2011-10-13T18:43:12Z Transportation Secretary Ray LaHood said on Thursday that he expects Congress to finalize a new infrastructure program before the end of the year. That's the good news. The bad news: the Congressional leadership just said the Administration's plan is "dead... ashby said on Thursday that he expects Congress to finalize a new infrastructure program before the end of the year. That's the good news. The bad news: the Congressional leadership just said the Administration's plan is "dead on arrival". Alas, the politicization of of key policy issues continues. ]]> Infrastructure Investment in Weak Institutional Contexts tag:crgp.stanford.edu,2011:/news//15.4429 2011-09-27T17:15:10Z 2011-09-27T17:20:14Z Maria Victoria Murillo and Alison E. Post have an interesting new paper out entitled, "Infrastructure Investment in Weak Institutional Contexts: Exit Threats and Regulatory Bargaining in the Argentine Electricity and Water Sectors." It's well worth reading, as it rewrites some... ashby Maria Victoria Murillo and Alison E. Post have an interesting new paper out entitled, "Infrastructure Investment in Weak Institutional Contexts: Exit Threats and Regulatory Bargaining in the Argentine Electricity and Water Sectors." It's well worth reading, as it rewrites some of the traditional strategies adopted by infrastructure investors in difficult institutional contexts. Here's the abstract:

]]> Inspired by Hirschman's classic Exit, Voice and Loyalty (1970), a venerable line of scholarship in political economy has argued that government economic policy can be influenced by investor threats of exit. Exit threats issued by firms operating in capital-intensive industries such as infrastructure and utilities are assumed to be less credible, which makes them vulnerable to governmental opportunism, particularly in weak institutional environments that provide few checks upon policymakers. The vulnerability of firms operating in weak institutional environments is heightened because of the intensity and frequency of economic crises in such settings. These crises typically prompt governments to revise original contractual conditions. This paper offers a new framework for understanding project and sector-level variation in post-crisis negotiation outcomes that turns standard exit cost arguments on their head. We argue that investors that are more patient as a result of high exit costs and that can draw on a broad range of informal bargaining strategies are more likely to conclude contract renegotiations yielding crucial changes that allow them to operate on more favorable terms in a given market. This paper assesses the explanatory power of this argument through an examination of an original panel dataset of exit decisions and contract renegotiation outcomes in the electricity distribution and water and sanitation sectors in Argentina following the 2001-2002 macroeconomic crisis.