Infra annual deal flow to near $300bn over next five years

Disposals by struggling utilities, renewables firms and transportation companies will provide the bulk of investment opportunities, according to fresh research.

As cash-strapped public bodies and industrials continue to shy away from needed infrastructure spending, private investors are bound to benefit from a strengthening deal flow, a recent study shows.

A report by Bain & Company, due to be released in March, found that global infrastructure investments will reach $4 trillion by 2017. This will be driven by the combination of two powerful forces: the need to upgrade aging infrastructure in the West and the build-up of transport, energy and other public services schemes in emerging economies. This should boost infrastructure investment by four percent annually well into the second half of this decade, the consultancy said.

This will translate into a robust deal flow for private investors, which should see between $200 billion and $300 billion worth of deals coming their way over the next five years. The pipeline was already loaded with more than $1.5 trillion of projects at the end of July 2013, Bain said.

The report saw the woes faced by global utilities, and their inability to invest in renewable energy projects, as the prime source of opportunities for the private sector. Utilities failing to keep up with capital expenditure (CAPEX) needs in power generation, for example, would offer opportunities worth a yearly $100 billion, while the gap they leave in renewable power generation and transmission investment could create an annual pipeline of around $130 billion.

The secondary sale or privatisation of transportation brownfield assets was also deemed an important theme, as were greenfield opportunities in oil and gas storage, mainly driven by liquid natural gas (LNG) facilities.

Interesting insights came out of the geographical breakdown of expected deals, with Asia Pacific coming a distant first with a planned pipeline of more than $400 billion. North America (with $294 billion) and the Middle East ($258 billion) followed, while Western Europe (with $234 billion) only came in fourth position.