The vendor's database will bring transparency to the infrastructure project finance market
Inside Market Data
10 June 2016
New York-based Infraccess, a data and technology startup helmed by two former Standard & Poor's executives, is developing a data service that aims to bring greater transparency and liquidity to the infrastructure project finance market.
Infraccess will employ machine-learning technology to "scrape" public sources of unstructured information to create a database of structured data about current and pending infrastructure projects and financing. The database is aimed at funds, asset owners and investment managers who want exposure to the market but have been unable to allocate any significant amount of their budget to infrastructure projects because of a lack of available data.
Until now, these investors have relied on banks pitching deals, or have needed to seek out data themselves from local government agencies or departments of transport, but it can be hard to compare different projects directly. Meanwhile, services that already exist that collect this data are usually in the form of unstructured sources, such as newsletters compiled by journalists and analysts, says Infraccess founder Neil Smith. As a result, these investors typically invest in infrastructure-related investment trusts that may comprise energy or construction company stocks, rather than investing directly in infrastructure projects.
In contrast, Smith says that by bringing more transparency -- and hence liquidity -- to the market, Infraccess will enable investors to invest directly in infrastructure projects via specific municipal bonds, via project financing loans from banks, or via equities or bonds issued by a Special Purpose Vehicle created for a specific project.
"Agencies are interested in raising awareness of projects... As a way to attract more diversified investors and get better pricing [for the bonds issued]. And some of the construction companies and outsourcing firms are interested because it gives them business development opportunities around upcoming projects," Smith says.
Infraccess' technology will scrape and standardize information sources to update its database in real time with metrics such as the length of a toll road, the amount of toll, and the volume of traffic, so investors can quickly and easily compare the value of different projects and make investment decisions. The next step, Smith adds, is to develop an algorithmic score for projects, based on whether they are running on-budget and on-schedule, which investors can use as a predictive indicator for other projects that the same parties are involved in.
Smith plans to name a full management team later this year -- including product and commercial executives, plus developers and a chief data officer -- the first of whom is managing director and infrastructure specialist Arthur Simonson, who spent the past 17 years at S&P, most recently as managing director of credit ratings.
Smith himself founded Infraccess last year after serving as managing director of S&P Credit Solutions at S&P Capital IQ, prior to which he spent four years as managing director and global product head at Fitch Solutions, and three and a half years as a managing director at Bank of New York Mellon, dealing with structured financial products and project financings. Before joining BNY Mellon in 2007, Smith spent 10 years at Citigroup in various roles, including investment center head, business manager and senior investment officer for the bank's Citibank Alternative Investments division, and as head of credit and portfoliio advisor at Citibank Credit Structures.
"While at S&P, I had already been involved in thinking about infrastructure for a while, and especially over the last couple of years. For example, at BNY Mellon, I worked on the International Custody and Trust side, which involved a lot of project financing," Smith says. "Demand for infrastructure financing continues to grow... but I also saw the weaknesses in the market -- the small number of players, and the lack of transparency."
Infraccess will offer its data via a database, and also via a front-end interface. Smith declines to give a specific date for when the service will launch, but says he plans to begin a testing period with a select group of early-adopter clients in October or November.
infraccess - smart data for infrastructure