The Reason Foundation’s 2023 Annual Privatization Report: Transportation Finance indicates that for the second year in a row, global infrastructure investment funds rose to a record amount: $149 billion in 2022. Those funds invested just under $150 billion, 48% into brand new (greenfield) facilities, 23% into infrastructure mergers & acquisitions, 15% into refinancing, 9% into taking publicly traded entities private, and 4% on ‘other.’ Overall, these funds had $820 billion in assets under management at year-end and another $380 billion worth of dry powder—funds raised but not yet invested in any kind of project.

Also, for the second year in a row, transportation was the largest infrastructure sector these funds invested in, at 72% of the total. Of this total expenditure in 2022, the largest share of transportation megaproject public-private partnerships (P3s) that were financed were U.S. projects, specifically John F. Kennedy International Airport New Terminal One ($8.4 billion), JFK Terminal 6 ($4.7 billion), Maryland Purple Line refinancing ($2.7 billion), and Pennsylvania Major Bridges Program ($2.3 billion), among other noteworthy projects.

A key source of the growing private equity investment funding was explained by the Annual Report as the expanding role of public employee pension systems in infrastructure investments. During 2022, with the stock market down, the median state pension system return on investment was minus 5.2%, compared with their targeted long-term return on investment of 7%. The majority of U.S. state and local public employee pension systems have significant unfunded liabilities. In sharp contrast, large Australian and Canadian public pension funds are fully funded. One of the keys to that status is several decades of careful investment in revenue-generating infrastructure, as summarized in the report. The good news on this front is the slow but steady increase in U.S. pension systems allocating sums to infrastructure investment funds which enables them to invest in a portfolio of projects anywhere in the world.

[NOTE: Reason Foundation publishes this report each year to help legislators, commentators, and journalists better understand and follow developments and trends in long-term design-build-finance-operate-maintain public-private partnership projects. There are profound differences between DBFOM projects and traditional design-bid-build and design-build projects. DBFOMs are financed mainly via private-sector equity investment and non-recourse revenue bonds, based on project-derived revenues. Where does that equity come from? From infrastructure investment funds, such as those listed and discussed in the annual report].