Infrastructure isn’t just roads and bridges anymore. Even a slimmed down version of a federal infrastructure bill would incentivize private investment in companies across the value chain servicing roads, water processing facilities, and airports. Think construction firms, of course, but also the technology companies whose process management software facilitates power plant operations and the cargo services outfits that would see more demand if airports expand to deliver more flights. O’Melveny & Myers partners Elizabeth Dubeck, Denise Raytis, and Eric Richards tell Mergers & Acquisitions where the investment bonanza will land.

A potential federal infusion of cash into infrastructure development projects lifts all ships, says O’Melveny & Myers’ Corporate Department Co-Chair Eric Richards. For example, “Companies that develop equipment or software that relate to the use of infrastructure–think about an asset like a toll road. There are companies that have developed sophisticated software to manage traffic flow more efficiently, price the use of the asset more efficiently for cars and other users. There are lots of investing opportunities there.”

The implications for mergers could be equally frothy. 

“As infrastructure money pours into certain sectors, there’s room for private sector companies to consolidate around providing those services: providing [environmentally] clean operations, construction, development, or services,” says Dubeck. “In aviation for instance, companies that provide cargo services or ground handling will have more opportunities, which could create opportunities for M&A.” 

That’s a message private equity and alternative asset managers are hearing loud and clear. BlackRock’s (NYSE:BLK) $1.67 billion capital raise for its Global Infrastructure Debt Fund was announced last month. The fund aims to offer bespoke financing for sponsors and other borrowers developing assets with sub-investment grade credit quality. The deal comes months after KKR was reported to seek $12 billion from investors for its newest infrastructure fund, a massive target given its previous raise closer to $7 billion. KKR had over $11 billion in commitments to its first three Global Infrastructure Investors funds as of the end of the first quarter, with much of them already invested.

Does infrastructure really need another catalyst? Well, not really. Firms are already girding for investment in infrastructure, whether legislation passes or not. 

“Whether or not the [infrastructure] plan as it comes out includes funding and initiatives for educational infrastructure, for example, the major universities are going to make those investments regardless, so the need is real. Investment is needed,” said Denise Raytis, Partner in O’Melveny’s Project Finance & Development Practice. 

Private investment is already spiking. More traditional infrastructure plays such as water treatment are newly ‘awash’ in deal comps. Veolia finally cleared months of acrimonious negotiations with rival waste and water treatment company Suez to clinch a $15.4 billion deal in April. And Clayton, Dubilier & Rice and BASF are reportedly considering a sale of water treatment company Solenis, perhaps prompting a re-examination of a market buoyed by fresh deal precedents and growing end markets.

Infrastructure investment will be robust no matter the politics, but public investment should lure even more private dollars to a hot market.