A bright outlook for infrastructure deals

Is the corporate market about to re-ignite?

The sale of EDF Energy’s transmission assets for an unprecedented amount suggests the market for core, robust infrastructure assets remains healthy.

Pre credit-crunch, prices attached to infrastructure assets were inflated by a combination of readily available debt, strong equity interest through funds and corporates alike and the possibilities of short-term gains through re-financing and consolidation.

This, in turn, led many corporate owners of infrastructure assets to consider realising value and led to sales of ports, airports and utilities amongst other assets.

Since the market turmoil of 2008/9, we have seen less corporate activity - with deals driven by changing corporate strategy or regulatory requirement, rather than opportunistic sales.

Following competitive sale processes for EDF, High Speed 1 and London Gatwick Airport amongst others, we now expect to see corporate owners undertaking portfolio reviews. It appears probable that infrastructure assets considered non-core by their owners will be made available, in the knowledge that buyers’ appetite has returned.

Further, the UK Government, amongst others, has published the list of assets it intends to divest, which has re-ignited interest in what had been a quiet market.