DALLAS - The U.S. Department of Agriculture and CoBank have created a $10 billion public-private partnership fund to build rural schools, hospitals, and water systems with investments by institutions, pension funds, endowments, and other private partners.
Anchor investor CoBank has committed $10 billion of balance sheet capacity to co-lend with the new U.S. Rural Infrastructure Opportunity Fund. Cobank is a $102 billion-asset cooperative bank that lends to agribusiness and serves Farm Credit associations, a government-sponsored network of banks in 23 states.
Agriculture Secretary Thomas Vilsack said Thursday that USDA and other federal agencies will help identify rural projects in need of financing from the new fund and through other private sources and public-private partnerships.
"USDA and other agencies invest in infrastructure through a variety of federal initiatives, but our resources are finite and there are backlogs of projects in many parts of the economy," Vilsack said. "We know the need is out there, and we also know the profit opportunity is out there."
The fund is immediately open for business, Vilsack said.
Capitol Peak Asset Management will manage the new fund and recruit more investors to add to CoBank's initial commitment.
Projects funded through the new effort will include hospitals, clinics, schools, roads and bridges, rural water and wastewater systems, energy projects, and expansion of rural broadband, Vilsack said.
Some projects may be funded entirely with private sector dollars, he said, while others may involve private dollars leveraged with government loan and grant programs.
"These are loans that everybody would like to do and be involved in, but that challenge has been making sure that folks with the resources are aware of the projects," Vilsack said at a White House news conference announcing the rural fund.
Many major investors in urban centers are often unaware of the significant investment opportunities in rural communities, he said.
"We're the eHarmony.com of infrastructure and business investment," Vilsack said. "We know where investment opportunities exist, so we are in a position to help promote these projects among investors."
The fund partnership brings together USDA's knowledge of the opportunities available in rural America with CoBank's ability to bring in capital, he said.
"Frankly, if we do it together, we're going to be able to do leverage each other's resources far more effectively," Vilsack said.
The rural infrastructure fund will attract a variety of new participants, he said, including pension funds, endowments, foundations, and other institutional investors that have not traditionally had access to rural development efforts.
CoBank will review and decide on each transaction individually on a case-by-case basis, said chief executive officer Robert B. Engel.
"To remain competitive, we must develop innovative financing strategies that will ensure infrastructure investment keeps pace with the needs of agriculture and other key rural industries," Engel said.
Loans made by CoBank side-by-side with the fund will remain on its own balance sheet or be syndicated to Farm Credit institution partners, he said. The loans will be supplemented by additional capital provided by investors brought in by the fund manager.
"It will enhance access to capital for a wide array of vital infrastructure projects around the country and speed up the process of rural infrastructure improvements," Engel said.
CoBank may also service some loans made through the fund.
