Building new bridges - are insurers the new banks for infrastructure investment?

BearingPoint. Institute Building new bridges - are insurers the new banks for infrastructure investments? Bridging the infrastructure finance gap? Before the financial crash banks were prepared to finance long-term infrastructure projects. However, due to restrictive regulations, it is now more difficult for them to provide loans with long maturities Banks are shortening their loan maturities as Risk level they are increasingly constrained by Maturities after | Maturities financial crisis before Basel III financial crisis Bank loan Bank loan Construction phase (3-4 years) Operational phase (20-40 years) Not to scale and for illustrative purposes only Source: BearingPoint European project finance volumes are lower than 2005 levels Volume by source, 2005–2012 in $billions 127 -61% 110 19 93 18 80 82 1 14 11 1 12 59 56 8. 1 49 7 95 10 86 67 Equity 61 3 Debt: 57 41 45 Bonds 34 Loans 4 4 5 8 11 7 7 IFI* 2005 2006 2007 2008 2009 2010 2011 2012 Support Grants Source: Infrastructure Journal database extract for BearingPoint (2013) *IFI: International Financial Institution (e.g. European Investment Bank, Kreditanstalt für Wiederaufbau, European Bank for Reconstruction and Development) Governments and banks will not plug the gap BearingPoint European investors survey 83% of bank and asset managers think that regulations such as Basel III will constrain banks' infrastructure lending 86% 79% of all respondents agree that banks now offer significantly less long-term project financing say governments will fund fewer infrastructure projects [ 53% agree 33% strongly agree ] [ 61% agree 18% strongly agree ] [61% disagree 22% strongly disagree ] BearingPoint-Infrastructure Journal survey, 2013. Survey data; 55 respondents – 26 Banks and Asset Managers, 11 Insurers, 10 Pension Funds, 8 Other funds BEI-003-09-INB-IN