Deal volume falls, but value rises in H1 2015

Led by the $17.8 billion Sabine Pass Liquefaction Train project in Louisiana, the US saw a 75 percent increase in deal value year-over-year, securing its place as the highest-valued infrastructure market for three years running.

The first half of 2015 saw a slowdown in activity when compared with H1 2014, but in line with the old adage, in this case, less was surely more.

Deal volume fell by 14 percent year-over-year, with 261 deals in H1 2015 and 302 deals in the same period last year. But by value, H1 2015 grew to $162.89 billion in H1 2015 from $116.62 billion in H1 2014, a 28.5 percent increase, according to data gathered for Infrastructure Investor Assets, a project managed by our in-house Research & Analytics team. 

Sector-by-sector 

As with previous years, the energy sector saw the most investment by value in H1 2015, representing $70.47 billion in combined value stemming from 53 deals, a 43.26 percent share of total value for the half. Transport trailed with $56.47 billion in value arising out of 56 deals. The renewables sector saw the most volume by far, with 107 deals valued at $24.72 billion. Social infrastructure accounted for 32 deals with $6.84 billion combined value. Waste & water saw nine deals worth $2.98 billion in the half and four telecoms deals amounted to $1.4 billion.

The top five subsectors of H1, respectively, were gas with seven deals worth $40.47 billion, roads with 23 deals worth $20.89 billion, oil with 20 deals worth $17.02 billion, rail with 13 deals worth $16.78 billion and power with 26 deals worth $12.96 billion.

In H1 2014, for comparison, oil deals led the way with 28 transactions worth $30.04 billion, while rail rolled out 14 deals worth $13.53 billion, wind blew in 52 deals worth $13.42 billion, power supplied 34 deals worth $12.85 billion, and roads trucked along with 22 deals worth $12.31 billion.

Region-by-region 

On a region-by-region basis, North America attracted the most capital in H1 2015, with 60 deals accounting for $60.59 billion, a 37.2 percent share of total activity. Western Europe, which was last year's most active region, saw 93 deals worth $34.89 billion, and Asia-Pacific saw 47 deals worth $27.02 billion. The Middle East and Africa together saw 33 deals worth $26.15 billion, Latin America attracted $13.93 billion through 26 deals, and Central & Eastern Europe saw little activity, with only two deals valued at $296 million in the first half.

As with the past three years, the US was the most active nation in terms of projects that reached financial close, stimulating $51.41 billion in activity through 39 closed deals, an increase of more than 75 percent in value and a 13 percent increase in volume year-over-year. Australia and the UK flip-flopped from last year, with Australia bringing in $16.40 billion via 21 deals and the UK drawing $12.95 billion through 36 deals in H1 2015.

Other top 10 countries for infrastructure investment in this year's first half included, Turkey (nine deals worth $11.91 billion), Saudi Arabia (three deals worth $10.42 billion), Canada (21 deals worth $9.18 billion), France (five deals worth $6.33 billion), Peru (five deals worth $6.18 billion), Spain (13 deals worth $4.08 billion) and Germany (four deals worth $3.48 billion). 

Projects 

The largest asset to reach financial close by far in H1 2015 was the $17.8 billion Louisiana, US-based Sabine Pass Liquefaction Train 5 project, with contracts signed on June 30.  

Financing for the project includes $2.85 billion of senior secured debt facilities from a syndicate of 25 commercial banks and other financial institutions, $600 million from the Export-Import Bank of Korea (KEXIM), $400 million from a syndicate of Korean commercial banks supported by a guarantee from KEXIM, and $750 million from a syndicate of Korean commercial banks supported by an insurance policy from the Korea Trade Insurance Corporation (KSURE), according to IIAssets data. 

Sabine Pass Liquefaction acted as borrower with Chadbourne & Parke representing the lenders. BG, Gas Natural Fenosa, KOGAS, Gail, Total and Centrica acted as offtakers with each agreeing to a 20-year contract term. Bechtel will develop the project with Cheniere Energy Partners as sponsors. 

The project didn't quite measure up to the massive $20.4 billion Australia-based Queensland Curtis LNG Project that was the largest to close in H1 2014, but far outpaced the $3.7 billion Egyptian ERC Oil Refinery (Stage II) that topped H1 2010's project closing list.

The top 10 project financial closes in H1 2015 were comprised of five transport projects in Turkey (the $7.2 billion Gezbe-Orhangazi-Izmir Motorway PPP Refinancing), Peru (the $5.3 billion Lima and Callao Line 2 Metro PPP Project), France (the $3.76 billion Autoroutes Paris-Rhin-Rhone (APRR) Project Refinancing), Canada (the $3.24 billion St. Lawrence Bridge PPP Project), and the UK (the $2.76 billion Thameslink PPP Refinancing 2015), four energy projects – three in the US (the Sabine Pass project, the $14.6 billion Corpus Christi Liquefaction Train 1&2 Project, and the $4.61 billion Freeport LNG Third Liquefaction and Export Facility Project) and one in Saudi Arabia (the $8.1 billion Rabigh Phase II Project Refinancing) – and finally, a single renewables project in Pakistan (the $3.1 billion Neelum-Jhelum Hydropower PPP Project). 

In total, the top 10 project financial closes reported to IIAssets in H1 2015 comprised just over $70.5 billion in combined value, doubling up on H1 2014's $35.4 billion top 10, which was led by the Oman-based Sohar Refinery Improvement Project, closed on April 30, 2014 with a value of $5.7 billion.