With the super-growth in emerging economies – especially in India and China – there is likely going to be a secular trend for infrastructure. In fact, this should be the case in mature economies as well, even the US, as the infrastructure is getting fairly old and needs to be replaced.
To deal with the growing infrastructure needs, there will also be a need for substantial amounts of capital. To this end, Morgan Stanley (NYSE: MS) announced it has formed an infrastructure fund, raising $4 billion for the fund.
Meanwhile, General Electric (NYSE: GE) has teamed up with Credit Suisse (NYSE: CS) to create its own fund – with $5.6 billion.
Basically, these funds will focus on things like toll roads, ports, water systems, airports, parking lots and other income-generating platforms. While the upfront costs can be tough, the long-term cash flow characteristics look bright. Perhaps that's why – despite the credit crunch – these funds had little trouble getting started.
Tom Taulli is the author of various books, including The Complete M&A Handbook
Steve & Barry's prepares to file for bankruptcy
Before the bell: Futures lower as oil rises, despite Alcoa earnings
Alcoa's Q2 2008 earnings transcript
