Bringing you live news and features since 2013
Bringing you news, views and analysis since 2013

20973

Billion-dollar infrastructure deals on the rise in the US

RELATED TOPICS​

A new report from Preqin has found that the proportion of infrastructure deals the US larger than USD1 billion reached record levels in 2015 as asset valuations continued to rise. 

Twenty-seven per cent of all deals announced in 2015 were larger than USD1 billion, up from 20 per cent in 2014 and an increase of 17 percentage points from 2012. This has been matched by a decline in the proportion of smaller deals announced in the country; in 2010 deals valued at less than USD500 million represented 87 per cent of all infrastructure activity in the US; in 2015 this had fallen to 54 per cent. 

The rise in infrastructure asset valuations has been part of a wider uptick in deal activity within the US market. Deal numbers have remained consistently high since 2011 with the number of infrastructure deals completed annually not falling below 188 (2014) nor exceeding 214 (2013). The reported aggregate deal value has also risen from USD43 billion in 2014 and USD33 billion the year before to reach USD63 billion in 2015, a post Global Financial Crisis (GFC) record. Deal activity in the US has got off to an active start in 2016 with 69 deals worth USD30 billion transacted to-date.
 
North America-focused infrastructure funds, which primarily look to invest in the US, have the lowest risk in comparison to other private capital strategies and, after buyout funds, the second highest return of funds targeting the region; infrastructure funds generated a median net IRR of 10.8 per cent, with a 12.3 per cent standard deviation of net IRRs. 

With a higher proportion of larger transactions, the average infrastructure deal size in the US rose to a record USD802 million in 2015, an increase of 36 per cent from 2014 (USD590 million).This marked the fifth consecutive annual increase in average deal size, although in 2016 YTD the average stands at USD682 million. 

Secondary stage deals are responsible for nearly two-thirds (65 per cent) of completed US deals since 2014. Greenfield assets represent just over a quarter (26 per cent) of all transactions, with deals completed at the brownfield stage representing 9 per cent of transactions. 

Deals involving renewable energy assets account for the majority (52 per cent) of transactions completed since 2014 in the US. Completed deals in the utilities (21 per cent) and energy sectors, excluding renewables, (18 per cent) also make up notable proportions. 

“Increasing valuations for infrastructure assets saw the number of large-cap infrastructure deals in the US soar in 2015, which in turn has pushed the average deal size to an all-time high. With US infrastructure funds performing favourably compared to other private capital strategies and showing the lowest level of risk, it seems that the market has scope to grow further,” says Tom Carr, Head of Real Assets Products, Preqin. “While record high asset pricings may be a concern for both infrastructure firms and investors, the quantity of capital flowing into the industry at present indicates that there will be no drop-off in the rate of transactions. Indeed, as of May 2016, fund managers have more dry powder to invest in North America (USD76 billion) than ever before, and so the robust infrastructure financings seen in the US through Q1 2016 could continue, making 2016 a record-breaking year.” 

Latest News

Irish domiciled funds surpassed EUR4.3 trillion AuM (Assets under Management) at end-March 2024, a 15..
New analysis by London-based Nickel Digital Asset Management reveals 38 listed companies with a combined..
Bloomberg has announced that for the first time, its proprietary Bloomberg Second Measure (BSM) transaction..

Related Articles

Global ESG Investing
On May 15 Florida’s Republican Governor Ron DeSantis signed legislation that furthers his ongoing campaign to oppose the role of climate change and ESG factors in state policymaking...
On May 15 Florida’s Republican Governor Ron DeSantis signed legislation that furthers his ongoing campaign to oppose the role of..
Trends
The trend to buyout among the UK’s smaller defined benefit (DB) schemes continues with a slew of new sub GBP100 million deals announced this month alone...
The trend to buyout among the UK’s smaller defined benefit (DB) schemes continues with a slew of new sub GBP100..
Different flavours
In what is believed to be the first survey of its kind in the UK market, Nedgroup Investments, the investment-led, multi-boutique global asset manager with over USD20 billion under management, recently undertook a survey with 204 UK investment professionals, seeking insights into their perceptions and attitudes towards boutique asset managers...
In what is believed to be the first survey of its kind in the UK market, Nedgroup Investments, the investment-led,..
UK map
UK local government pension schemes (LGPS) are leading the charge on investment in private markets issuing tenders set to be worth billions of pounds in the coming years...
UK local government pension schemes (LGPS) are leading the charge on investment in private markets issuing tenders set to be..
Subscribe to the Institutional Asset Manager newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by