Asia Propels Record Investment in Unlisted Infrastructure Assets in 2016

A report on the unlisted infrastructure deal market finds that while the number of financings in 2016 remained consistent with recent years, the aggregate deal value surpassed all previous years.

Released by Preqin, the study shows that in total, 1,772 deals were completed for infrastructure assets equalling $413 billion, although Preqin expects these figures to rise by up to 5% as more information becomes available.

This marks an increase of 14% from the $362 billion in total deal value seen in 2015, and a sizeable increase from the aggregate deal value of $327 billion recorded in 2014.

The number of transactions remained similar to the levels seen in 2015 and 2014, which saw 1,743 and 1,787 deals completed respectively, as average asset valuations within the market continue to rise.

Asia has seen a significant push for infrastructure investment over the past few years, and saw the highest level of financings of any region in 2016; 552 deals were completed for a record $131 billion as fund managers noted the potential for development within the region.

Europe is also a prominent market for infrastructure deal activity, and the region saw the highest number of deals (555) for a total of $97 billion, while the mature infrastructure market in North America also attracted significant levels of capital ($96 billion).

Given the demand for infrastructure in less developed countries, it is perhaps unsurprising that the rest of the world saw 237 financings for $89 billion, and accounts for five of the top 10 largest deals of 2016.

Rise of renewables

As the global push towards alternative energy sources continues, renewable energy has become increasingly prominent; in 2016, renewables accounted for 42% of all deals, up from 39% in 2015 and 37% in 2013.

Transport represented 25% of deals in 2016, a decline from 30% in 2015.

Deals by project stage

Through 2016, greenfield and secondary sites accounted for the highest proportion of infrastructure deals, with 42% and 38% of global financings respectively.

However, a fifth of all transactions completed were for assets in the brownfield stage of development.

Deals by value band

As valuations and the average deal size have risen, large-cap deals have accounted for a higher proportion of the market.

Financings larger than $1 billion represented 13% of infrastructure deals in 2016, up from 10% the previous year, although assets smaller than $100 million still represented the majority (51%) of transactions in 2016.

Largest deals

Natural resources pipelines account for four of the top 10 largest infrastructure deals in 2016, including the two largest in the UK and Indonesia.

Three of the largest 10 financings were for assets in Australia, while two were for refinery plants in Indonesia.

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