The National Audit Office (NAO) in Britain finds profits for investors were expected to exceed the target of 12% to 15% in 84 of the 118 public private partnership (P3) projects that it analyzed.
Instead, investors regularly see profits of between 15% and 30% by selling their equity in the secondary market.
The government responded to the report by stating the analysis “needs to take into account a wider range of issues that together contribute to the overall economics of a transaction, rather than merely looking at equity returns”.
For its part, Construction News concludes "the root cause (for the high profits) is that civil servants are not sufficiently competent to stand up to bankers on complex financial issues."
I'd say even 12% to 15% percent is a pretty good return (never mind 15% to 30%) -- especially when the investors are dealing with a pretty safe credit risk -- the government.
The NAO report itself concludes, "investors bear some risks, particularly in the early stages of projects, but these risks are limited." (Contrast this with the major claim of advocates of P3s who argue risk transfer to the private sector is one of the main benefits of P3s --and one which the public is supposed to pay a hefty price.)
Nevertheless, the NAO report also suggests consideration of other forms of public private partnerships.
The full report is available on the NAO web site.