AIC to press private-equity case in Trump infrastructure push

  • Trump may push an infrastructure investment bill alongside tax reform
  • Democrats want infra financing from government
  • AIC preps report to Congress on the role private equity

With the Trump administration seeking legislative success after its healthcare bill hit a speed bump, an infrastructure bill may reach the agenda sooner than expected. Private equity’s lobbying group wants to make sure the industry isn’t shut out of the resulting opportunities.

At Buyouts PartnerConnect East conference in Boston last week, Mike Sommers, president and chief executive of the American Investment Council, said his organization is working on a report to submit to Congress “on how to attract private investment” to any major public-works initiative.

According to Sommers, who was chief of staff to former House Speaker John Boehner, there are “a lot of efforts in the House and the Senate on how you fund a large infrastructure investment in an era of large deficits.” Since some of AIC’s member firms have infrastructure funds, the group wants to ensure there are no impediments to PE involvement in the process.

The Republicans’ decision earlier this month to pull their healthcare bill added urgency to the infrastructure push, a key campaign pledge of President Donald Trump. Tax reform is the next item on Trump’s agenda; the idea of combining that with infrastructure has been around since before the election, based on the the hope that spending on internal improvements will entice Democrats into supporting a package deal. The White House reportedly favors such an approach.

Though Democrats have long wanted an infrastructure bill, financing is a sticking point. In his first address to Congress, the president reiterated his campaign call for $1 trillion of investment, “financed through both public and private capital.” A report at the time by Wilbur Ross and Peter Navarro, economic advisers to candidate Trump, recommended tax credits totaling 82 percent of the equity invested. (Ross, founder of the buyout firm WL Ross & Co., is now secretary of commerce.)

Top Democrats in the Senate have proposed their own trillion-dollar plan, based on direct federal spending. Senate Minority Leader Chuck Schumer has said tax breaks will not suffice to fund the necessary upgrades.

AIC’s James Maloney told Buyouts the group is in the “research phase” of preparing “a report related to infrastructure and how private equity can play a role in public-private partnerships.”

Maloney said AIC “expect[s] to have something ready probably by late April,” either a letter to Congress or a general report, with findings and solutions, released to the media. For now, AIC is meeting with advocacy groups, including the Association for the Improvement of American Infrastructure and ThinkP3, to study existing recommendations.

“We’re still probably two or three weeks out from getting a better sense from the administration of how much they’ll push for this in 2017,” he added, “and, more generally, of where Congress is.”

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Photo of Mike Sommers courtesy of AIC