A renewed capital investment structure is required for long-term investment in power infrastructure.
Frank A. Napolitano is managing director and co-head of the Global Power Group at investment bank Lehman Brothers.
The bank markets and the long-term fixed income markets, or institutional investors, have long memories, and their pain is still fresh. Over the last few years, they have had to watch their investments in power infrastructure become distressed, bankrupted, or reorganized.
Even as we argue that the infrastructure financing markets may have stabilized for the time being, both from a financial and a fundamental standpoint, the undeniable fact is that investors still remember what's happened in the United States, and they remember privatizations in foreign countries where they experienced similar losses. In short, investors are wary.
Without mention, the ability to attract investment is central to developing new infrastructure that will help resolve many of the power issues we face today.
Yet, given the recent power markets, and investor sentiment, many utilities could not be blamed for believing that sources of funding have dried up.
Because of our extensive activity in the market, Lehman Brothers has a different perspective. There is money and there are opportunities that lie in the infrastructure financing market today — but only with the right capital investment structure.