Beyond transport

It’s true that the rest of France’s pipeline can’t compete, in terms of sheer size, with the likes of RFF’s high-speed rail programme, or monumental ideas like Grand Paris. However, that doesn’t mean it isn’t attractive in its own right.

In fact, for a certain type of mid-sized investor looking for more modest deals in the social accommodation space, France offers a sizeable pipeline of projects in defence (including a new prisons programme), education and stadia.

Take the Ministry of Defence’s new prisons programme, which aims to build upwards of 10,000 new cells across the country in a bid to modernise France’s detention centres. With tenders oscillating at between €100 million and €300 million, these deals will be procured as availability-based public-private partnerships (PPPs), known in France as contrats de partenariat.

As such, they will be a prime target for the likes of Barclays Private Equity, Natixis’ FIDEPPP, Dexia’s South Europe Infrastructure Equity Fund (SEIEF), OFI InfraVia, or Atlante, the former Babcock & Brown vehicle bought by French real estate group SERCIB – all mid-sized infrastructure funds targeting deals in the PPP space.

French Pentagon

Other deals in the defence pipeline, albeit larger in scale, include the construction of Balard, a €600 million defence complex to be located in Paris’ 15th arrondissement, or administrative district. The building will house some 10,000 military officials and is often referred to as the French Pentagon. Consortia led by Bouygues, Eiffage and VINCI are in the final stages of running for the project with a winner to be announced soon.

Another similarly grandiose project is the construction of Paris’ new Palais de Justice, worth in the range of €1 billion, to be located in Batignolles, in the 17th arrondissement. The new justice complex will have capacity for some 3,500 functionaries, judges and lawyers and, like Balard, will be housed in a landmark building. Since both projects required consortia to separately engage several architectural studios, they are led by France’s larger developers. But they still offer opportunities for interested infrastructure funds.

For the new Palais de Justice, the two consortia in the running, led  by Bouygues and VINCI, include several infrastructure funds, with Dutch funds DIF and SEIEF partnering with Bouygues, and Barclays teaming up with VINCI.

Similar partnerships can be found in the stadia programme, promoted by the central and regional governments in the run-up to the European football championship in 2016, which France is hosting. For Nice stadium, in south-east France, VINCI and SEIEF again teamed up while Bouygues partnered with FIDEPPP and InfraVia for the new Marseille stadium, also in the south of the country. Other stadia at Bordeaux and Orleans are in procurement.

While slow to come to market, projects that form part of the €5 billion Operation Campus – an initiative to modernise and group various universities across France into 12 campuses – are set to launch this year, led by the €500 million-plus Grenoble University. Expect similar partnerships to form for these projects.

‘We look at everything’

One clear theme running across France’s infrastructure market is that it is dominated by local players, in particular by the “big three”. As a senior member of one of France’s leading developers puts it: “Given our size, we will look at everything”. And while it isn’t written that they have to win everything, you can be sure that if Bouygues, Eiffage and VINCI are participating in a tender, one of them will almost certainly come out on top.

Which is why standalone consortia of foreign investors are conspicuously absent from the vast majority of France’s tenders (a rare exception being a recent contract awarded to Italian developer Atlantia, to install a tolling system to tax heavy vehicles). But if you’re willing to align your interests with the local players, then one of Europe’s most beguiling infrastructure pipelines awaits.

The lure of hydropower

Mouth watering (pun intended) is how many infrastructure investors are reacting to France’s upcoming auction to renew the concessions for some 5,300 megawatts of hydropower across the Alps, the Pyrenees and in central France.

Long held by French utility EDF (and, to a much lesser extent, by GDF Suez) the government will group 49 hydropower plants along the same river/valley into 10 separate concessions, which it intends to start tendering from this year through to 2015.

With several European utilities already announcing their intention to participate in the auctions, expect infrastructure funds to crop up alongside some of the industry players.