If the US was a school child, it could be in for a scolding. For the past 20 years, its grade from the American Society of Civil Engineers (ASCE) has wavered between a D and C–, a reflection of its inadequate network of roads, bridges and waterways. The recent blackouts have reiterated the country’s need for a major infrastructure upgrade. From his vantage point as head of the US chapter of EQT Partners, however, Alex Darden sees signs that the country’s infrastructure sector is about to have its moment. 

The Stockholm-headquartered private equity firm — the world’s eighth largest by assets under management — opened in the US in 2008, and Mr Darden has been there since the beginning. While the pandemic has had a devastating impact on all facets of life, he believes its long-term ramifications for infrastructure investment could be quite different.


“There is going to be a huge capital infusion as a result of the stimulus,” he says. “Plus, the past year has exposed some weak underbellies in social infrastructure such as nursing homes, where the impact has been disproportionate to the rest of society.” Indeed, healthcare experts suggest the layout of elderly care facilities has contributed to residents and staff being so severely affected by Covid-19.

Mr Darden, who also leads EQT’s US infrastructure business, sees the pandemic accelerating “several megatrends which will create a watershed moment in investment opportunities over the next decade”. Growing momentum behind the energy transition requires not only renewable power plants, but also the reimagining of transmission networks.

Ecommerce’s explosion — plus consumers’ expectation to receive orders within a day or so — calls for better logistics across the full delivery chain. And internet infrastructure must keep pace with the digital economy. Studies suggest that up to 13% of Americans have no access to broadband, and the pandemic shows that access can be patchy. “As kids transitioned to virtual schools, it became obvious how unreliable coverage is in many rural and lower-income communities. The demand for connectivity and data is all-encompassing — be it schools, corporates or individuals moving to the cloud,” says Mr Darden. 

Government gaps

The ASCE estimates that the US faces a $5.6tn infrastructure gap by 2039. For investors, the best opportunities may lie in improving existing structures. “The government is good at building things, but not so good at maintaining them,” says Mr Darden. “Maintenance is not very sexy, so it’s often pushed back until later.” 

The federal government’s infrastructure shortcomings extend beyond upkeep, though. The Democrats’ control of both houses of Congress has fanned hopes for president Joe Biden’s $2tn infrastructure package, details of which could be announced in March. But Mr Darden is wary of, and frustrated by, the fact that ambitious infrastructure targets set by previous presidents were bogged down by the political process. “This should be something Americans can come together on, regardless of their side of the aisle,” he says. “I’d like to think it will happen this time, but infrastructure investment always seems to fall down the ladder when it should be the easiest win.” 

Spending aside, Mr Darden hopes the president’s infrastructure push will include streamlined approval processes to remove unnecessary hurdles to investment. He also hopes that regulatory friction during national security reviews by the Committee on Foreign Investment in the United States (CFIUS) will be eased. He floats the idea of pre-approving repeat investors to shorten processing times: “A framework which allows someone who has gone through the CFIUS process before — to utilise that past experience to streamline their future activity — would take some of the uncertainty out of transactions.”

The Scandinavian touch

While US private equity firms are frantically raising climate-focused funds, sustainability permeated EQT’s business long before before it became fashionable. Its founders opened shop 27 years ago with the vision of being ‘more than capital’. All investments must meet strict sustainability criteria which continue throughout the ownership period. 

EQT recently worked with an engineering firm to identify emissions from each portfolio company and is now trying to transition them all to clean energy. Last year, the EQT-owned Fenix Terminal at the Port of Los Angeles was powered solely by renewables, and in December the firm acquired Molslinjen, Denmark’s biggest passenger ferry company, with the goal of converting the diesel-powered fleet to renewable fuels. “We fundamentally believe that being socially responsible and achieving financial returns are not mutually exclusive,” says Mr Darden.