France and Turkey lead European PPP market as Italy and UK plummet

The provision of institutional debt in European PPP projects has increased by 55%, as well as increasing the number of countries lent to.

France and Turkey have established themselves as Europe’s leading PPP markets amid a significant fall from the UK and Italy, according to the latest market update from the European Investment Bank.

Despite a great amount of political and economic instability in 2018, Turkey retained its 2017 crown in the European market with the largest value PPP projects closed of €5.1 billion, albeit a €900 million drop from the previous year. France overtook the UK with the largest number of projects closed, more than doubling its tally from the previous year.

The UK led the pack in 2017 with 12 projects closed, with this falling to eight in 2018. Italy joined the flailing pack by closing zero deals in 2018, after being the second largest in terms of value in 2017. Both countries endured a difficult year in terms of PPPs, with the UK government declaring an end to the private finance initiative while the Italian government put the future of both existing and future PPP projects in doubt following the collapse of the Morandi Bridge in August last year.

The report also noted a 54.8 percent increase in the provision of intuitional debt in European PPPs, with 21 out of 39 projects featuring institutional investors’ debt, compared with 13 out of 42 projects doing so in 2017. The number of countries lent to was extended from five to eight, with Belgium, France, Germany, Ireland, the Netherlands, Serbia, Turkey and the UK all having projects financed by institutional investors.

Transport projects were the largest in terms of value and among the largest in terms of number of projects, boosted by the financial closures of a bridge and a motorway in Turkey totalling €4.3 billion. Projects in the telecoms and environmental spaces also had seven projects closed each, totalling €3 billion and €2 billion, respectively.

Overall, 2018 saw the lowest ever number of PPP projects – 39 – reaching financial close since the EIB began recording in 2009, when 100 PPPs worth €10.4 billion were sealed.