Efficient Public‐private Capital Structures

Abstract

This paper presents a rationale for hybrid public-private capital structures in public utilities. The public sector can borrow money cheaper, while private investors can spawn life-cycle cost savings. When investment vehicles enable the internalization of the financial advantage of the public sector and the managerial advantage of the private sector, a Pareto-efficient capital structure is achieved with both the public and private parties as shareholders. I show how different knowledge transfer schemes determine the optimal shareholding structure for the utility company. Estructuras eficientes de capital público-privadoEste artículo presenta una fundamentación de las estructuras híbridas de capital público-privado. El sector público puede financiarse de manera más barata, mientras que los inversores privados pueden generar ahorro de costes a lo largo del ciclo de vida de la infraestructura. Cuando los * This is an extensively revised version during my visit at the Haas School of Business,

Innovative Financing: An Empirical Study on Public–Private Partnership Securitisation in China

“…Contractual relationship in PPP project financing Notes : Adapted from Moszoro (). [Color figure can be viewed at wileyonlinelibrary.com]…”

“…Moszoro () notes that the lowest total financial and development cost can be realised with the structure of mixed public and private shareholding. An issue with bank financing is that banks can rarely grant loans for the kind of 20‐year spans required for PPP projects.…”

Institutional and Political Determinants of Private Participation in Infrastructure

“…Tackling such a complex and interconnected agenda requires analysis of synergies and adoption of a holistic approach to infrastructure development. Social discount rate (Arrow & Lind, 1970); interest rate differential (Moszoro, 2014a) Lower government beta and access to capital vs. investment efficiency and productivity differential (Grout, 2003) Access to capital Access to external financing (Esty, 2011) Investment efficiency…”

Formation of Optimal Capital Structure in Private–public Partnership

“…Lower costs of P3 result from lower cost of capital of the public partner. Meanwhile better quality is achieved due to the transfer of know-how from private partner to the public body (Moszoro, 2010). Therefore, effective cooperation of private and public sectors in the preparation of P3 projects, especially characterized as being large-scale and having long-term consequences, is very important.…”

“…The relevance of the problem demonstrates the gradually growing amount of literature in which the problems on the formation of optimal capital structure in P3's are analyzed (see eg. Lopez-Lambas and Monzon, 2010; Moszoro, 2010;Zhang, 2005a,b;Dewatripont and Legros, 2005;. However, most of this research can be characterized as analyzing this process only fragmentarily.…”