Amtrak seeking private investments for Next Gen NEC HSR

[afigg]

Amtrak put out a press release yesterday about their request for proposals for private investments for the next generation HSR NEC plan. The pr titled "AMTRAK PURSUING PRIVATE INVESTMENT TO SUPPORT NORTHEAST CORRIDOR HIGH-SPEED RAIL PLANS" can be found at http://www.amtrak.com/servlet/ContentServer?c=Page&pagename=am%2FLayout&cid=1241245669129

Excerpt from the bulk of the release:

"Amtrak is developing an in-depth business plan that will maximize the opportunity for private investment to finance the construction of infrastructure and the acquisition of equipment required to provide 220 mph (354 kph) next-generation high-speed rail service in the Northeast Corridor.

“Amtrak will aggressively pursue private investment, in combination with funding from the federal government and from other public sources, to achieve our goal of initiating true high-speed rail from Washington to Boston,” said Al Engel, Amtrak Vice President, High-Speed Rail.

In April, Amtrak issued a request for proposals for a fully implementable and robust business and financial plan where Amtrak is the key developer and operator of the high-speed rail system. It will identify and develop public and private funding sources and address fundamental issues of risk, credit, debt and investment phasing among other criteria.

The business plan also will include strategies and tactics for meeting the project delivery timelines and achieving financial targets, provide information for Amtrak’s FY 2013 federal budget request and lay out the strategy for subsequent forays into the private investment and capital markets. To date, numerous private investment firms have expressed interest in working with Amtrak. Proposals are due June 10.

Mr. Engel said the active pursuit of private financing is one of several actions taken by Amtrak to move forward its next-generation high-speed rail vision plan since it was announced in September 2010. Another key action is the development of a stair-step approach outlining a clear, structured and coordinated path to achieve 220 mph service on exclusive operational segments first between Philadelphia and New York, then New York to Washington, followed by New York to Hartford and finally Hartford to Boston."

Will be interesting to see how this plays out. Anyone have a few billion to invest?

 

[stntylr]

Put me down for 20 dollars.

Politicians talk about public-private projects all the time. I hope this can work because I think it's the only way we will see 220 mph rail.

 

[Anderson]

I don't see it happening on the scale the government has to be looking for. The investment required to make a full line work would be over $100bn...or, in simpler terms, about twice the combined market cap of Norfolk Southern and CSX. Even half of that would blow out any company with experience in the field.

 

[jis]

I don't see it happening on the scale the government has to be looking for. The investment required to make a full line work would be over $100bn...or, in simpler terms, about twice the combined market cap of Norfolk Southern and CSX. Even half of that would blow out any company with experience in the field.

I don't expect railroad companies to invest in such ventures necessarily. If it can be made worthwhile and a good financial case made, I'd suspect that it would be other investors who would invest. The railroads are already upto their eyeballs in their own infrastructure woes. As to whether that will happen or not, hard to tell at this moment. But at least starting the dialog is a good thing.

 

[Anderson]

I don't see it happening on the scale the government has to be looking for. The investment required to make a full line work would be over $100bn...or, in simpler terms, about twice the combined market cap of Norfolk Southern and CSX. Even half of that would blow out any company with experience in the field.

I don't expect railroad companies to invest in such ventures necessarily. If it can be made worthwhile and a good financial case made, I'd suspect that it would be other investors who would invest. The railroads are already upto their eyeballs in their own infrastructure woes. As to whether that will happen or not, hard to tell at this moment. But at least starting the dialog is a good thing.

Well, I guess the problem is that you'd need to find one of three things:

1) A company with lots of capital sitting around and nothing to do with it in their main field;

2) A company in a very low margin field with capital to burn making investments; or

3) Exceedingly solid prospects in the business.

2 tends to be something of an oxymoron: Low-margin fields tend to result in companies not having money to burn (unless you have highly consolidated volume). 1 does happen, but there are usually better (and more focused) alternatives for companies to look at; most of the big holding companies are more likely to buy an existing business (or shares in one). And considering the timeframes we frequently see, 3 is rather unlikely to be good enough for someone like Warren Buffet or Carlos Slim to want to jump at the chance.

The dialogue is good to see, but it feels like a dead end given the numbers involved...and something gnaws at me if the government is putting up much of the capital but not getting much (if any) of the benefits from the project.