A glut of infrastructure assets, low interest rates and a demand among investment managers for stable returns has pushed the value of infrastructure deals to a record $145 billion worldwide, 180 percent higher than the deal level of 2000. Some say the amount of money involved in infrastructure transactions represents a "structural change" to the M&A environment.
The figures were compiled by Thomson Financial and reported in the Financial Times. The newspaper said the pace of deals will continue as "more toll roads, airports, privatized water companies and electricity distribution groups come on the block." Both state-owned investment funds and private equity firms have been involved in the deals, says the FT, with PE firms accounting for more than half of the total volume, the FT says.
Investment banks are also getting in on the action, launching new funds focused on infrastructure. UBS and Qatar have joined to bid for the UK's largest water company, Thames Water, using the bank's Global Infrastructure Fund to provide some of the financing. A deal could be worth up to $10 billion.
UBS's head of European M&A, Tom Cooper, told the newspaper the amount of money involved in the sector represents "a structural change as institutions are increasing their weighting to this sector."