Citi Makes Infrastructure Play
The pending sale of the Pennsylvania Turnpike represents reflects the opportunity investors are finding in infrastructure
May 19, 2008
Citi led a group of investors who have put in a bid of $12.8 billion to take over control of the Pennsylvania Turnpike, a move being billed by the state’s governor as a “slam dunk.”
Citi Infrastructure Investors, joined by advisory group Babcock & Brown and Spanish transport and communications firm Albertis Infrastructure, legged out rival bidding groups led by Goldman Sachs and Macquarie to win rights to the highway.
The deal, which has already earned the support of Pennsylvanian Governor Ed Rendell, must pass state legislative approval before Citi can take the reins of the lease.
The plan is for the state to raise $150 million annually through the deal, and it currently has Pennsylvania dropping plans to institute tolls on Interstate 80, according to a statement.
Earlier this year, it was reported that Citigroup is raising up to $3 billion for infrastructure investments. The initiative comes as investors increasingly target deals in the space. Just last week it was reported that Kohlberg Kravis Roberts would raise funding to pursue infrastructure investments, while The Blackstone Group is reportedly considering a similar effort.
A joint study from the Urban Land Institute and Ernst & Young estimates that the U.S. will experience a $170 billion shortfall for infrastructure needs.
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