Public-private partnerships (PPPs) bring the relative strengths of public and private sectors in tandem to tackle a project. They can occur across various industries and interests, including infrastructure (such as roads, airports, and utilities), healthcare, and education. This type of financing for projects, which are deemed to benefit people, allow government funding to be supplemented with private investment.
For over 10 years, Canada has built many schools, hospitals, and other government buildings through PPP arrangements. There has also been a keen interest for PPP in the US and around the world for several years, with several states enacting legislation to allow for such investments.
“The US is a very attractive place for companies to invest and make money. The owners of major projects tend to see them through to completion because of, among other things, the availability of capital,” explained Craig Gortner, Senior Vice President, Commercial Surety, Chubb. “For several years, we’ve seen a great deal of investment in these projects coming from outside the US.”
PPPs, whether internal or external to the US, often require security in the form of surety bonds. Global insurer Chubb has an experienced international surety division, which helps enable PPPs and other forms of project delivery to proceed in countries throughout the world.
The Chubb surety team recently played an integral role in the placing of a complex surety bond for Altán Redes, a consortium backed by US-based bank Morgan Stanley Infrastructure Fund and the International Finance Corporation designed to work in partnership with the Mexican government to deliver a shared wholesale 4G LTE network that will expand internet coverage to more than 92% of the Mexican population.
Chubb used its extensive experience and global platform to help Altán Redes and the Mexican government achieve a mutually acceptable framework for the project. Navigating such complex PPP deals is not a simple task.
“There are many challenges to underwriting surety bonds for PPPs,” Gortner told Insurance Business. “From the outset, you need to ensure that all of the involved parties truly want the project to go ahead. Sometimes, parties can be so focused on the big picture investment they may not always see the details associated with the project and with facilitating its completion. As an experienced surety provider, Chubb assists its clients with identifying complex risks in an effort to help them successfully navigate those risks.”
With the help of Chubb’s expertise and support, the Altán Redes consortium won the bidding process for the shared wholesale 4G LTE network PPP project in November 2016.
