Global infrastructure deal activity slowed in the second quarter, with just 225 deals concluded, down on the 339 transactions seen in Q1, according to the Preqin Q2 2016 infrastructure deals update.
However, this downtick is not reflected in the total deal value, with the USD72 billion announced in Q2 approaching the USD89 billion seen in the previous quarter.
In comparison to Q2 2015, when 215 deals were concluded for a total of USD53 billion, the number of deals remains similar; but the increased level of capital invested by infrastructure fund managers this quarter points to the rising valuations of assets.
As such, the average deal size increased from USD247 million in Q2 2015 to USD263 million in Q1 2016, before rising significantly to USD321 million this quarter.
A surge of investment in Asian infrastructure assets drove global deal activity in the quarter with financings in the region accounting for 51 per cent of the total deal value, despite representing just 27 per cent of all transactions. In total, 57 deals worth an all-time high of USD36 billion were completed in Asia, a substantial uptick on the previous peak total deal value of USD18 billion recorded the previous quarter.
Europe saw USD17 billion worth of infrastructure financings over the quarter with assets in North America completing 63 deals with an aggregate deal value of USD14 billion.
The proportion of completed infrastructure deals larger than USD1 billion has grown consistently since 2013 when they accounted for 11 per cent of all transactions. Large-cap deals represented 14 per cent of all financings in 2015, while in H1 2016 16 per cent of infrastructure assets purchased were at least USD1 billion. 

Renewable energy assets remain the most attractive industry for managers, accounting for 35 per cent of infrastructure deals in H1 2016.
The proportion of transport financings has risen to a quarter of all financings, compared to 22 per cent in 2015, while social assets represented 14 per cent of all deals. 

The proportion of deals that were for secondary stage projects declined from 70 per cent in Q1 to 41 per cent in Q2. However, financings for brownfield sites in Q2 accounted for a fifth of all deals, up from five per cent the previous quarter, while greenfield assets represented 39 per cent of all deals, up from 25 per cent in Q1. 

The largest deal of the quarter was the April acquisition of the Tuban Refinery Plant in Indonesia for USD13 billion. Six of the top 10 deals were concluded for natural resources assets, while transport systems accounted for the other four largest deals.


“Despite a slow-down in the number of infrastructure financings through the second quarter of 2016, assets were still attracting robust levels of capital,” says Tom Carr (pictured), head of real assets products, Preqin.
Preqin expects the total capital invested in the industry to approach the levels seen recent quarters and through the mid-section of 2014, with competition as intense as ever for blue chip assets.


“While infrastructure fund managers will be concerned at the trend of increasing capital being concentrated in fewer, higher-priced infrastructure assets, the sustained investment proves there is appetite for the asset class. With Asia gaining an increasing share of the market, and managers shifting to brown and greenfield sites in Q2 it is clear that experienced infrastructure firms are using all of their expertise to capture the most favourable assets,” says Carr.
