Privatization no "panacea" for U.S. states: banker
NEW YORK (Reuters) - Public-private partnerships for infrastructure are not a "panacea" for cash-hungry U.S. states and cities eager to expand or build new utilities, water plants, roads or bridges, a JPMorgan Chase & Co banker said on Thursday.
Mark Weisdorf, global chief investment officer of infrastructure investments for J.P. Morgan Asset Management, noted at the Reuters Infrastructure Summit, that higher taxes and tolls were also an option.
"We don't promote infrastructure as a solution for states or municipalities that need capital; they have their own advisers," to weigh the most cost-effective means, he said.
Several U.S. states and cities have seen a backlash against public-private partnerships, which often involve decades-long leases for assets.
Deals in Texas, for example, have been criticized for enriching developers at taxpayers' expense and not safeguarding
the public from the risk that a private company might go bankrupt.
This kind of criticism led another summit speaker, Tom Osborne, a UBS managing director, to predict on Wednesday that new public-private partnerships might be smaller -- in the $1 billion to $5 billion range -- than the much bigger deals that residents spurned in New Jersey and Pennsylvania.
"We don't invest where we're not wanted," said Weisdorf. "If a state feels they want to bring in private capital, we'll talk to them."
Weisdorf's clients include public and private pension funds, and he predicted that U.S. public pension funds increasingly will turn to infrastructure as an alternative to stocks and bonds.
"I believe that if enough state plans invest in infrastructure, that most of that money will find its way back into the U.S. economy," he said.
State pensions likely will prefer to diversify any such investments around the nation instead of putting funds into a project in their own state, he said.
"It will be diversified, less subject to political persuasion, based on economics."
Weisdorf stressed that his clients' interests were his first priority. "The pensioners want a decent return. We don't use regional or political issues to impact our decisions," he said.
