Unlisted infrastructure fund managers across the globe completed 130 deals in 2009, the lowest annual total since 2005. This represented a drop of nearly a third from the number of deals in 2008, the first since unlisted infrastructure funds emerged as a distinct investment strategy. However, given the market conditions, infrastructure deal volume has shown resilience. Between 2008 and 2009, the annual infrastructure deal volume fell by 33%, compared to an 82% decrease in infrastructure fundraising.
This information is taken from Preqin’s Infrastructure Online service, which contains details on which fund managers are bidding for, buying or selling infrastructure assets, listing all deals made by unlisted fund managers. It includes information on the type of infrastructure asset and location, data on the equity invested and the percentage stake acquired by the firm, information on the deal date, structure and duration plus names of co-investors in transactions.
Additional key facts on deal activity:
- The number of deals made by unlisted infrastructure fund managers peaked in 2008, with 194 investments made during the year, having increased each year from 2003 to 2008.
- Quarterly dealflow peaked in Q2 2008, when 68 deals were completed. Following this, the next four quarters all recorded a decline in the number of deals from the previous quarter.
- Q2 and Q3 2009 both saw 27 deals completed by unlisted infrastructure fund managers, which were then followed by a slight uptick in activity in Q4 2009, with 37 deals made in the quarter.
- The average deal size in 2009 fell to $600mn, a 45% decrease from the $1.1bn average in 2008.
- In 2009, one-third of infrastructure deals made by unlisted fund managers were valued at less than $100mn. Just over half of deals were valued at between $100mn and $999mn, while deals valued at $1bn or more accounted for the remaining 15%.
- Infrastructure assets in Europe were the subject of 79 of the deals made by unlisted fund managers in 2009, while there were 25 investments in assets in North America and 26 investments in assets in Asia and Rest of World.
- The core infrastructure industries of energy (55 deals in 2009), telecommunications (4), transport (30) and utilities (15) still dominate the marketplace, with the four asset types accounting for 80% of the 130 investments made during the year.
Further details are included on the factsheet which can be downloaded on clicking here.
Comment:
“The decline in the number of deals executed in 2009 can be attributed to a number of factors. At an industry level, fund managers were restricted by the severe contraction in debt availability, the lack of available assets with relatively simple deal structures, and sellers’ high asset valuations. Conditions were also difficult at a fund manager level, most noticeably the intense competition resulting from a record number of fund managers operating in the asset class.
Although some believe that the worst of the crisis is over, it is still difficult to predict when we will see a major upturn in the number of deals being made by unlisted infrastructure fund managers, as the credit markets remain somewhat restrictive. Going forward, many deals will be dependent upon increasing equity ratios or, alternatively, a reduction in vendors’ price aspirations.”
Richard Stus, Senior Analyst – Infrastructure
