Infrastructure M&A Deals Drop off in 2018

The majority were in renewable energy, and two were the largest deals in the space to date.

Infrastructure deals slowed  in 2018, and a majority of those deals were in renewable energy.

Total deals for 2018  currently amount to 2,454, a $332 billion value, according to Preqin, which believes these figures will increase by up to 5% once more information becomes available. Of that total, 57% of the deals were in renewable energy.

Although the results bested 2016’s 45% renewable energy portion of the year’s infrastructure deals, 2018 overall underperformed compared to 2017. That year saw 3,165 deals totaling $387 billion. The data firm says that the comparison points to a slowing in the space’s activity.

“Following a peak in 2016 which saw a record amount of capital invested in infrastructure, the industry has seen deal activity decrease year-on-year,” said Patrick Adefuye, Preqin’s head of real assets. “The number of deals made in 2018 has declined from 2017, posing a particular challenge at a time when fundraising is at record levels. The influx of capital has put upward pressure on asset pricing, and has made finding attractive opportunities more difficult for many managers.”

That said, a silver lining can be seen in the $22.8 billion sale of Innogy to E.ON SE. The acquisition is not only the largest of 2018, but also the highest infrastructure agreement ever completed. The year also saw the second-biggest infrastructure deal in history as well, when Total acquired Direct Energie for $16 billion.

“On the flipside, renewable energy has had a stellar year, accounting for over half of deals made, and the two largest deals made this year were also the two largest deals in renewable energy ever made,” Adefuye said.

Deal activity in Europe surpassed North American transactions. Acquisitions in the former totaled 859, worth $152 billion. The latter lagged a little in number, at 801, and a lot in value, at $78 billion.

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