The infrastructure market saw 365 deals announced in Q3 2017, worth a combined USD88 billion. Preqin expects these totals to rise by around 5 per cent as more information becomes available.
However, this already surpasses the USD55 billion in deal value seen in Q2, reversing the slowdown seen through the first half of the year. While aggregate deal values have rebounded, the number of deals announced has continued to fall, failing to match the 414 deals seen the previous quarter. As a whole, 2017 has so far marked a significant slowdown compared to 2016: in the first three quarters of last year, 1,753 deals were announced worth a combined USD335 billion, compared to 1,282 deals worth USD231 billion in Q1-Q3 2017.
Europe saw the largest amount of deal activity, with 168 financings worth a combined USD45 billion. By contrast, North America recorded 79 deals worth a total of USD32 billion.
Renewable energy assets have continued to attract the most attention in the first three quarters of 2017. They account for 57 per cent of the number of deals announced so far through the year, up from 47 per cent in 2016.
The proportion of small deals of less than USD100 million has fallen sharply in 2017 so far, down from 50 per cent in 2016 to just 39 per cent. All other deal size classifications have accounted for a greater proportion of deals compared to last year.
Greenfield deals account for just 3 per cent of Q3 activity, while secondary stage assets again represent over three- quarters of deals announced in the quarter (77 per cent).
The largest infrastructure deal announced in Q3 2017 is the USD18.8 billion acquisition of Oncor Electric Delivery by Sempra Energy. It is the ninth largest infrastructure deal ever.
“The infrastructure deals market in the first three quarters of 2017 has stood in sharp contrast to the fundraising landscape: while fundraising has been strong, and several record-breaking large funds have come to market and secured investor capital, the deals market has seen a slowdown,” says Tom Carr (pictured), Head of Real Assets Products at Preqin. “Three out of four quarters of 2016 recorded more than 550 deals announced, a level that no quarter of this year has matched. At the same time, quarterly deal values have fallen from USD100 billion to around three-quarters of that on average.
“This will be of some concern to fund managers and investors alike, and reflects the increasing difficulty deal makers face in finding attractively-priced opportunities. Unlisted fund managers are increasingly competing with corporate or institutional investors for assets, and the large influx of capital to the market over the past two years is putting upwards pressure on deal pricing. Despite this, managers remain confident in their ability to find and secure attractive opportunities, and if some momentum can be carried into the last quarter of the year, we may see the industry return to the heights of 2016 over the coming months.”
