Dallas investors bet on Trump infrastructure plan

News, Dallas Business JournalMarch 2017

Corporate

In the Dallas Business Journal, Matt Morris discusses the plans companies are making to prepare for possible infrastructure improvements under the Trump administration.

As appeared in the Dallas Business Journal, March 21, 2017.

By: Jon Prior

Dallas investment firms have quietly been making bets that President Donald Trump can strike a deal on fixing the nation’s roads and bridges.

The White House’s budget released last week actually cut some infrastructure programs, while officials stressed a building package, which was key among his campaign promises, would be coming soon.

One investment banking office in Dallas is marketing three industrial companies with ties to the Dallas market for sale, one of them being a cement company and another a building products manufacturer, according to a source at the firm who did not want to be named since the deals are not final.

Another investment adviser said nearly every global asset manager is preparing to stock infrastructure portfolios with companies that would stand to benefit from what Trump has said could be up to $1 trillion in these investments.

“It’s a question of when,” Kelly Landreth, director of Wells Fargo’s middle-market investment banking operation in the south, said of Trump’s infrastructure plan in an interview with the Dallas Business Journal. “Time does not make bridges get stronger. The general sense is that it’s going to happen sooner rather than later. “

Trump has floated the idea of using $137 billion in federal tax credits to private investors over 10 years to fund the projects. Many of the developments would rely on tolls to generate revenue for the investors. Democrats have preferred to use corporate tax reform to offset direct funding for infrastructure contracts.

However it's paid for, there is broad agreement among the parties that the federal government will up its spending.

Beyond the typical roads and bridges, Texas specifically has a dam problem. There are 1,212 dams in the state that are considered a “high hazard,” second only to Virginia, according to the American Society of Civil Engineers. The Trump administration has also highlighted local railway projects for funding.

“I saw several firms that were making that play on the pipeline of projects,” RGL Advisors Managing Director Matt Morris said in an interview Monday. “I’ve heard chatter about it.”

Some investors are dusting off a blue print for how North Texas companies benefited heavily from President Barack Obama’s stimulus spending during the recession in 2009. About $7.7 billion in funds that flowed to the state through 2010 saved or created more than 264,000 jobs in Texas, according to a 2012 study commissioned by the nonprofit Texans for Public Justice.

Investors are buying up companies from cement makers to trucking firms, and the prices they’re paying for these companies are going up.

“We’ve talked to a lot of those companies every day, and they’re getting a lot of offers,” said Mike Stengle, managing partner for Dallas financial firm Exit Partners.

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