The Europe-focused infrastructure market is developing at a rapid rate, with both fundraising and deal making hitting record levels in recent years, according to analysis released by Preqin.
A total of 34 Europe-focused unlisted infrastructure funds closed in 2016, raising a record USD25 billion. This accounts for nearly half (45 per cent) of all the funds closed globally through the year, the highest proportion recorded in the past six years.
At the same time, the aggregate value of infrastructure deals in Europe surpassed USD100 billion for a second consecutive year in 2016, with a record 772 transactions completed. It is therefore unsurprising that the industry in Europe has seen notable expansion in recent years; total assets under management increased to USD109 billion as of June 2016, up from USD104 billion in December 2015 and USD96 billion the previous year.
The makeup of the infrastructure deals market in the region is changing: for the first time in 2017 YTD secondary stage assets account for the largest proportion of deals completed (38 per cent), higher than greenfield (27 per cent) and brownfield (35 per cent) projects.
The number of infrastructure exits in Europe also achieved a peak in 2016. The region recorded 375 exits completed, an increase on the 239 seen the previous year.
Infrastructure industry assets under management in Europe totalled a record USD109 billion as of June 2016, up USD5 billion from the end of 2015.
Europe-focused infrastructure fund managers distributed a record USD20 billion to investors in 2015 – the first time capital distributions have outweighed call-ups – and returned a further USD1 billion in H1 2016.
Tom Carr, head of real assets products at Preqin, says: “Due to the number and diversity of countries located in Europe, the range of asset types and investment opportunities is vast. This variety is one of the key reasons why the region has seen such substantial, year-on-year expansion. With government incentives deriving from the European Commission driving activity, the region has seen record levels of capital secured in the past two years while the number of transactions completed in Europe hit an all-time high in 2016.
“As the infrastructure industry in Europe continues to grow and mature, especially as the push for renewable energy solutions gathers pace, it is likely that the market will become increasingly attractive to global investors. However, it is key that fund managers are able to overcome the obstacles of high valuations and intense competition in the deals market, so that the pace of capital being distributed to investors is sustained.”
