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It’s rare for one year to significantly change how investors perceive a specific sector, but 2020 arguably did just that for energy infra assets.
Energy demand has fallen sharply, and an oil price war has further destabilised the hydrocarbons sector.
The UAE pipelines purchase – one of the largest deals of the year – brings GIP III close to full deployment, as the fund suffers the effects of the coronavirus pandemic.
The Toronto-based firm has already deployed 35% of its latest vehicle in three assets in the midstream and aviation sectors.
pipes
After a decade of investment in North America, some infrastructure LPs found the sector tied more closely to commodity risk than expected. Now, the coronavirus pandemic and Saudi oil price war could push them away for good.
Highly leveraged midstream companies are likely to default on loans, but natural gas, which has not seen commodity price volatility like oil has, is one bright spot.
IFM chief executive Brett Himbury says deals at such a large scale see ‘improved’ risk-return dynamics compared with others at a lower ticket.
The firm’s second infrastructure fund is targeting $1bn and has acquired a business aviation provider and a water infrastructure company servicing the midstream sector.
energy
There has been a structural shift in how LPs are allocating funds to energy-focused vehicles, moving away from upstream and paying closer attention to renewables and sustainable strategies.
credit score
Private equity financial sponsors ‘take advantage’ of over-performance by paying themselves instead of repaying debt, according to a report from Standard & Poor’s.
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