Preqin’s latest analysis of investment activity within the global infrastructure space has shown that more than one-third of transactions completed in 2014 YTD were valued at more than $500 million, with the average investment valued at $523 million.
The analysis has shown that prices for assets traded so far this year are at the highest level on record.
While the average size of deals taking place has risen significantly, the number of investments being completed has fallen in recent years.
Other Key Facts:
- A total of 387 infrastructure investments have taken place in 2014 YTD, valued at an aggregate $122bn.
- Deal activity has been steadily falling over recent years, down from a high of 919 infrastructure deals in 2011 to 871 taking place last year.
- 30% of deals done so far this year were valued under $100mn, the lowest proportion compared toany year previously.
- The average deal size of investments in Asia have been consistently rising since 2008, with the most significant increase between 2013 ($280mn) and 2014 YTD ($411mn).
- Average investment size across Europe is slightly higher than 2013, at $440mn in 2014 YTD compared to $431mn in 2013.
- 45% of infrastructure deals done in 2014 YTD were in greenfield projects, up from 34% of transactions in 2013.
- Two of the largest deals done so far this year include Berkshire Hathaway Energy’s CAD 3.2bn investment in Canada-based AltaLink, and John Laing and Skanska’s $2.3bn investment in I-4 Ultimate Project in the US.
Andrew Moylan, head of real assets products, said: "The growth in demand for infrastructure, along with the much improved availability of debt, has resulted in greater competition for assets, and for established brownfield assets in particular. This increased competition has caused rising valuations and the average size of infrastructure deals globally has hit an all-time high in 2014.
"There remains a great deal of capital available, with fund managers holding a record $100bn in uncalled capital and with many institutional investors planning to grow their allocations to infrastructure demand looks set to remain strong. These increases in valuations have led to concerns that some infrastructure sectors are becoming overpriced, and those firms looking to put capital to work will have to work very hard to find value in the current market."