For Whom the Road Tolls: Part III

August 11, 2021 | 6 Min Read

This month, a bipartisan group of Senators passed a bipartisan plan that jumpstarts federal involvement in U.S. infrastructure spending. This plan contemplates $1 trillion of infrastructure investment, including $550 billion of new federal government spending across transportation, transit, ports, airports, water systems and broadband. Proponents of the plan believe that it will help to reposition the U.S. as a green energy leader, while keeping the country at the forefront of economic competitiveness. Opponents argue that it will simply crowd out other forms of infrastructure investment, including from state and local governments as well as private investors.  

What do we think? Well, we think this is a promising development to provide much-needed infrastructure investment. What’s more, there are some elements of the tentative plan as we understand it that may address some of the shortcomings of prior infrastructure spending bills:

  • Relative to previous plans, it’s the most broad and comprehensive, encompassing transportation, clean drinking water, the energy grid and digital infrastructure.
  • It is focused more on the long term than other plans have been – this is key when thinking about long-term projects and assets.
  • It seeks to more comprehensively address issues of resiliency and environmental sustainability, which in other plans have been modest.
  • It’s focused on areas in which the federal government can be most impactful, including around permitting, tax policy, leveraging federal highway rights-of-way and breaking federal agencies out of silos to address infrastructure needs.  

But before anyone becomes too optimistic, let us point out that there is still a major question -- perhaps the most important element to any infrastructure plan – that is currently unanswered: How will it facilitate or align the federal government with asset-level decisions made at the state and local levels?  Recall during the aftermath of the GFC that nearly $800 billion of federal stimulus was intended to be invested in “shovel-ready” infrastructure projects. Yet, in the years following the GFC, we saw federal government spending on infrastructure fall. Although there appears to be support from both political parties to get an infrastructure bill done, the impact on asset-level decisions and the resulting opportunities for private capital remain to be seen.

If the plan is taken as drafted today, what do we think it means for private infrastructure investment opportunities? We are infrastructure investors. We would love to say that a federal spending bill focused on infrastructure will creative massive opportunities for private capital. The reality is, we believe the sector and asset-level impacts would be mixed. Below is a snapshot of the targeted spending in the bipartisan deal and our view of the resulting opportunities for private infrastructure investors across relevant sectors:


Types of infrastructure assets

Targeted spending

Impact on private investment opportunities


Likely beneficiaries


  • Highways
  • Roads
  • Road Safety
  • Bridges
  • Rail
  • Airports
  • Port and waterways

$269 billion

Neutral to negative

  • Largest component of this is focused on roads and highways, which have been a very small target for private infrastructure investors in the U.S.  Deals that have been done have benefitted from fulfilling capital needs not funded by government sources. Likely effect on roads and bridges is to crowd out private investments.
  • Rail spending targeted at Amtrak and public transport, which have not been targeted sectors in the U.S. given public ownership and operations.
  • Amount allocated to airports and port facilities is negligible.
  • Services – heavy civil construction, design and engineering firms
  • Equipment – Think CAT, Komatsu and John Deere
  • Aggregates – concrete, asphalt, sand and gravel assets
  • Trucking – road investment may improve efficiency, but labor elements of the plan may work against trucking cos



  • Utilities
  • Treatment
  • Sanitation
  • Efficiency

$55 billion

Neutral to negative

  • Again, this has been a small sector target in the U.S. The few projects that have been done have benefitted from having a lack of public capital available to fund projects.  Public capital likely to crowd out private capital for opportunities.
  • Unclear how much of this will be direct spending vs. subsidies or tax credits.

Water utilities will be the largest beneficiaries, followed by service and pipe manufacturers




  • Fiber
  • Towers
  • Data Centers
  • Spectrum

$65 billion

Neutral to Positive

  • Data/telecom has been a large target for private infra investors.  While this plan does not favor particular technologies, the minimum upload/download speed requirements would encourage additional fiber spending.
  • The plan also supports rural broadband buildout and may prioritize networks that are not owned or managed by profit seeking enterprises.  
  • The plan subsidizes broadband for low-income households which could spur additional demand.

Rural broadband providers


Fiber line manufacturers




  • Transmission
  • Distribution
  • Charging
  • Low/No Carbon Buses and Ferries
  • Electric Vehicles

$88 billion

Likely positive

  • Grid resiliency and reliability is a major theme in this bipartisan proposal.
  • The proposal includes incremental funding to reduce outages, improve demand response, capture carbon and promote research in clean hydrogen, modular nuclear reactors and energy efficiency.
  • Many clean energy initiatives favored by the Biden administration may be taken up in a broader $3.5 billion budget proposal later in 2021.



Grid and transmission operators


Integrated utilities and distributed power generators


Nuclear power operators


Hydroelectric operators



EV companies


Ferry and bus fleet operators

Resiliency and Water Storage

  • Cybersecurity
  • Waste management
  • Flood mitigation
  • Wildfire, drought and coastal resiliency
  • Ecosystem restoration and weatherization

$50 billion

Likely positive

  • This is a broad category of investment to improve resiliency across a range of sub-sectors and industries.
  • Investment could benefit operating infrastructure businesses by investing in their physical plant and secure them from both environmental and cyber threats. 


Waste management businesses


Environmental services providers


Digital infrastructure and software providers


Ecosystem restoration specialists








  • Clean up of R&D abandoned wells, mines and Superfund sites Semiconductors


$21 billion


  • Not a target for private infrastructure investment


Our prediction is that the largest opportunities for private infrastructure investors could come from increased federal spending on broadband and energy transition.  

Broadband, globally, is now viewed as a critical service that serves to enhance the economic and productive capacities of the communities where it is available. This plan includes formula-based grants to states to enhance broadband rollout, including $2 billion directed to rural areas. The form of spending this takes will matter for private investors, but we believe the most likely scenario is that the federal government subsidizes the provision of rural broadband, which will allow existing asset owners to scale their networks more effectively. Rural broadband spending is politically very popular, with support from both parties.  

Electrification is another key theme for the Biden plan that could create additional opportunities for private investors in what is already a hotly targeted sector for private capital. EV charging stations and fleet retrofitting could benefit from more permanent federal tax policies and streamlined regulation.  

Transportation is targeted for the largest amount of federal spending in the plan. This sector has, historically, been a small target for private infrastructure investors in the U.S., as most of the transportation infrastructure is already funded by state, local or federal governments. Without a willingness to privatize some transportation networks and provide for large-scale tolling arrangements, we think the opportunity for private investors here will be small. Given the intersection (pun intended) of state and federal governments on transportation-related assets, we think increased federal spending here has the highest likelihood of crowding out private investors.

So, how do we think the Federal government can have the most meaningful impact?

  • Streamlining permitting and environmental review processes;
  • Providing federal regulatory certainty as it relates to energy policy; and
  • Making permanent certain tax credits and subsidies related to renewable energy or EV adoption (these tax credits and subsidies are currently intermittent and have to be renewed by acts of Congress every few years).

Without a strong federal government role, U.S. infrastructure assets are unlikely to receive the capital investment necessary to remain competitive on a global scale or keep pace with the expanding U.S. population. While public policy and public spending will continue to shape the infrastructure landscape in the U.S., there is a role for private capital to help shore up the funding gap if public and private incentives can be properly aligned.  

Without a more coordinated approach between various funding sources, we believe the U.S. will continue to see a significant funding gap in infrastructure, resulting in a slow but deliberate decline. This is something that both parties understand. As more developed peers continue to invest in connecting people, goods and services, the U.S. may start to hear the funeral bell ringing on its long-term economic competitiveness. As Hemingway said, “never send to know for whom the bell tolls; it tolls for thee.” 


This presentation is not an offer to sell, or a solicitation of any offer to buy, any security or to enter into any agreement with Hamilton Lane or any of its affiliates. Any such offering will be made only at your request. We do not intend that any public offering will be made by us at any time with respect to any potential transaction discussed in this presentation. Any offering or potential transaction will be made pursuant to separate documentation negotiated between us, which will supersede entirely the information contained herein.  

Any tables, graphs or charts relating to past performance included in this presentation are intended only to illustrate the performance of the indices, composites, specific accounts or funds referred to for the historical periods shown. Such tables, graphs and charts are not intended to predict future performance and should not be used as the basis for an investment decision.  

The information herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice, or investment recommendations. You should consult your accounting, legal, tax or other advisors about the matters discussed herein.  

As of August 11, 2021 

Recent Content

Podcast | 31 Min Listen

Building Economic Opportunity with Private Infrastructure

In the face of higher interest rates and upcoming elections, where are the opportunities for private infrastructure investing in North America and the EU?

Listen to the Podcast
Insights | 5 Min Read

The Case for Private Infrastructure in the Modern Era

Learn where private infrastructure stands today and where it may be headed through 2024.

Read the Research Article

The Evolving Opportunity Set in Infrastructure Secondaries

Learn why secondary infrastructure transaction volume is primed for growth in 2024 and beyond.

Read the Research Article

We use cookies to improve user experience, and analyze web traffic. For those reasons, we may share your site usage with our analytics partners.

Learn More