White & Case: The shift to non-core infrastructure-who’s investing where?

White & Case: The shift to non-core infrastructure-who’s investing where?

Chamber Member News Post Date: 04/20/17 Source: White & Case By: John Cunningham and Caroline Sherrell

The investment levels in non-core European infrastructure assets have more than tripled over the last seven years. And infrastructure funds have been the most active players in the non-core infrastructure space— accounting for between 44 per cent and 66 per cent of investment volumes in non-core infrastructure M&A activity between 2014 and 2016.

Although the crowded core infrastructure space and lack of quality returns were the main factors that led to this migration, InfraDeals data shows that these same dynamics are increasingly forcing their way into the non-core space.

A review of the most recent deals in the space shows that institutional investors are now steadily following their infrastructure fund counterparts into this lucrative area.

In 2011, infrastructure funds were largely the only investors in non-core infrastructure. However, in 2013, for example, institutional investors contributed a 48 per cent share of the segment, although this plummeted to just 3 per cent in 2016. Fluctuating levels of institutional investment in non-core can partially be explained by the cyclical nature of infrastructure fund asset disposals—large non-core divestments do not necessarily occur every year. While there have certainly been ebbs and flows in the level of institutional investor involvement, it is clear that infrastructure funds can no longer take the non-core marketplace for granted. Read Full Article