With oil prices in the doldrums, you would expect investment in hydrocarbons to take a break. Distressed sales perhaps, but new projects? Probably best to leave them in the ground for now.
Yet Norway's Johan Sverdrup Infield Pipelines Project topped Infrastructure Investor Research & Analytics' project finance league tables for the first quarter of the year, with a $4.3 billion senior secured facility that replaces its current $4 billion one. Oil and gas firms including Statoil and Sweden's Lundin Petroleum control the project.
The deal is part of a minority in the ranking though it is not entirely on its own: the US' Sabine LNG refinancing came seventh at $2.1 billion. But power was perhaps a stronger overall contender this quarter, with a PPP covering three new combined cycle power plants sponsored by the Egyptian Electricity Holding Company closing a $3.9 billion financing round in March.
The Middle Eastern country actually scored a hat-trick that month, with about $2.4 billion committed to the New Capital Combined Cycle Power Project and another $1.6 billion to the South Helwan Power Plant PPP Project. Another top 10 slot was taken by an IPP refinancing in Riyadh, which saw lenders commit $1.4 billion. The original financing, closed in 2010, had secured on $2.2 billion.
The water and wastewater sections were not a drop in the ocean in Q1 either, with the refinancing of Victoria's Desalination PPP Project garnering A$4.5 billion ($3.2 billion; €2.9 billion). The project, operational since 2012, is backed by the likes of Unisuper, Macquarie Capital and InfraRed. Also present in the top league was Qatar's Kahramaa Desalination Plant Project, which hit financial close in January on $3 billion.
Transport did not fare as well over the period, but a high-profile project did make it into the ranking: the Kansai and Osaka International Airport PPP. France-based Vinci Airports and the US' Orix Corporation, which won the 44-year concession in November, secured a yen 190 billion ($1.7 billion; €1.53 billion) loan in March. The concessionaire's funding plan totals yen 260 billion. The pair will pay yen 2.2 trillion to the government upon completion of the deal.
Overall, energy came on top of the sector table with $28 billion worth of deals, easily beating transport, which came second at $15 billion. Renewables was neck and neck with water, both respectively scoring $7.6 billion and $7.1 billion. Social infrastructure took home $2.1 billion.
The healthy dealflow provided solid business to lenders around the globe, but it is the Japanese club that proved best positioned to benefit from it. Sumitomo clinched the mandated lead arranger trophy thanks to projects such as the Sohar 3 and Ibri IPP in Oman, the Kansai and Osaka International Airport PPP, the Sabine LNG refinancing, the Fadhili Steam and Water Cogeneration Facility and the Affinity Flying Training Financing PPP.
Perennial rival Mitsubishi UFJ Financial Group followed closely behind and shared some projects with Sumitomo. But its roster also included the Kings Mountain Energy Centre Power Plant Project and the refinancing of four solar parks in France. The former, which will see the building of a gas-fired power plant that will sell capacity to nine municipal and state-owned utilities in North and South Carolina, is jointly backed by Guggenheim Partners and Capital Dynamics.
Interestingly, European outfits fared well in the rest of the list, with ING Group coming third, Crédit Agricole fourth and Grupo Santander sixth. Continental lenders retreated in the aftermath of the crisis but are seemingly back in the market in aggressive fashion. Other contenders in the top list include Germany's Norddeutsche Landesbank, the UK's Royal Bank of Scotland, Spain's Banco Bilbao Vizcaya Argentaria and London-based HSBC. Tokyo-based Mizuho rounds up the top 10.
Perhaps HSBC's Q1 decision to keep its headquarters in the UK capital reflects Europe's strength. The decision came after a 10-month review during which the government made a series of changes deemed favourable to the bank. The bank said it would abandon its usual practice of reviewing its headquarters every three years.
The move chimed well with the performance of Western Europe in our rankings. Not only did the region come on top in value terms – with total dealflow of $20 billion – it also scored high when looking at deal volume, with no fewer than 64 transactions. While this suggested a rather low average size, the A94 Forstinning-Marktl A Model PPP, Ital Gas Storage Project, London Gateway Port Refinancing and BIIF BidCo Refinancing stood out.
Middle East and Africa followed, with $16 billion in total across 20 deals, with some large transactions sealed in Q1, such as the Sohar 3 and Ibri IPP Project, the Fadhili Steam and Water Cogeneration Facility Project, the BW Singapore FSRU Project and the Borg El Arab International Airport Extension PPP Project.
Asia-Pacific came third, propelled by the Light Rail Transit Line 1 South Extension PPP and the Metro Rail Transit Line 7 PPP projects, both in the Philippines, as well as the Thar Block II Power Plant PPP Project. This topped a list already made big by the Kansai Airports and Victorian Desalination Plant deals.