The prospect of government action on infrastructure is a “super big deal” amounting to a multi-trillion-dollar investment opportunity, Blackstone Group chief executive Steve Schwarzman said in a television interview on Tuesday.
Schwarzman, who is in a unique position as head of the $350 billion private equity firm and chairman of a group of business leaders advising President Donald Trump, said both Republicans and Democrats agree that action is needed to improve the US's infrastructure. An issue mentioned frequently on the campaign trail, Trump has vowed to create up to $1 trillion of investment in infrastructure but has yet to work with lawmakers to make this happen.
However, Trump has pointed to the private sector as a means to help meet this commitment, creating a buzz in the industry that investment opportunities will soon open up.
“We know we have a huge multi-trillion-dollar need, and it's just a question of how you finance it,” Schwarzman said.
Blackstone has made numerous comments in recent months about increasing its involvement in the sector, with Schwarzman and his chief financial officer Michael Chae saying in January the group “plans to add funds in that space”.
Schwarzman suggested the US look at Australia's privatisation model, which he said is like a “fly wheel”, where government agencies sell profitable infrastructure assets to investors and recycle that money into new projects.
On top of mobilising capital investments, Schwarzman said the government needs to “de-bottleneck” project approval times so needed infrastructure developments can move forward efficiently. Projects are approved and underway in two years and Canada and Germany, according to Schwarzman, but it can take 10 to 15 years in the US.
“You have to attack infrastructure not just financially – because in a way it's very important, but it's more the tail of a dog,” Schwarzman said. “If you were given a lot of money, it'd be hard to build something anyhow.”
He concluded the interview saying people must realise infrastructure privatisation will be a tradeoff. “It's going to involve some people giving up some control, but what you'll get for that is lots and lots and lots of infrastructure,” he said.