Macquarie eyes more utilities, greenfield deals in North America

Macquarie Capital is eyeing more utilities and greenfield infrastructure deals in North America and is expecting smaller deal sizes going forward, one of the leaders of the firm’s North American investment banking business told delegates gathered at the 2009 Dow Jones Infrastructure Summit.

“We really like the regulated utility sector here in the US. It’s a deep and established market and it really needs capital. There’s some interesting opportunities in that space,” said Nick Butcher, senior managing director and head of infrastructure and utilities for the US and Latin America at Macquarie Capital.

“It’s proven itself to be resilient in this market relative to patronage-based infrastructure,” Butcher added.
In February, Macquarie closed a $7.9 billion buyout of Washington State utility Puget Sound Energy, one of the largest deals in the US utility sector in recent memory.

Beyond purchases of existing infrastructure assets like utilities, Butcher said that Macquarie is expecting there to be more Greenfield deals, or new development projects of infrastructure assets, and more availability payment-based deals, like Florida’s I-595 toll road project.

Macquarie acted as financial advisor to Spanish construction firm ACS on the I-595 project.
At the same time, Butcher expects overall deal sizes to shrink due to the difficult financing environment.
“The doable deal sizes have come down. One billion or below is all you can club together at the moment,” Butcher said.

“You’re not able to fund a Penn Turnpike in the current market, it’s just a stretch too far,” Butcher said, making reference to the failed attempt to lease the Pennsylvania Turnpike for $12.8 billion last year.