By Vyvyan Tenorio and Christine Idzelis

Until recently, aging infrastructure assets looked about as tantalizing to private equity investors as a bunch of trees. The comparison isn't far-fetched. The long-dated, low rates of return that infrastructure assets produce may be marginally better than the low single-digit returns that timberlands might yield after 40 years. Which is why U.S. buyout executives, hard-wired for high risk-reward bets, were less than enthused.

That mindset has changed the past few years. Five years ago, the city of Chicago sold a 99-year lease to Cintra, Concesiones de Infraestructuras de Transporte SA of Spain and Australia's Macquarie Infrastructure Group for $1.8 billion, giving the investors the right to operate the Chicago Skyway toll bridge. Many viewed the highway and bridge as a landmark event for privatization in the U.S., which has lagged Europe and Australia. Faced with crippling deficits and budgetary pressures, federal, state and local governments have increasingly turned to private capital to fill the funding gap for much-needed infrastructure improvements.

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Posted by boyang at April 3, 2009 7:08 AM