(December 3, 2012) — California Governor Jerry Brown is seeking financial backing of more than $50 billion from sovereign wealth funds, pensions, and endowments to build a bullet train, linking San Francisco with Los Angeles, along with other cities.
Brown’s proposal–if completed–would be the most expensive public-works project in US history.
“We have active interest in and outreach to sovereign funds and foreign consortia that are looking at us,” Jeffrey Morales, chief executive of the California High-Speed Rail Authority, told Bloomberg. Along with sovereign wealth funds, or state-owned investment pools, other potential investors include companies that will build and operate trains and stations.
The massive project is reportedly relying on $10 billion in bonds authorized by voters, $3.3 billion committed by the federal government, and as much as $55.1 billion from private sources.
Institutional support for real estate and public works projects have become increasingly attractive for those seeking stable returns. As federal stimulus money dried up, policy experts have called on the US government to encourage foreign sovereign wealth funds, such as the Future Fund, to invest in US infrastructure. American public funds already allocate largely to domestic projects, while Canadian pensions have taken a liking to Australian infrastructure.
The United Kingdom has also had its fair share of infrastructure investment. Pension investment in infrastructure projects could hit record levels, should new proposals that allow local government funds in the UK to double their exposure to the asset class be agreed. Local Government Secretary Eric Pickles, announced a plan last month that could unlock £22 billion from public sector pension funds. These pensions, which collectively manage £150 billion, are currently limited to committing just 15% of their portfolios to infrastructure under the terms of their investment rules. In total, these pension funds would have around £45 billion to invest in infrastructure projects – which the UK government hopes would be invested in the domestic economy.
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