Global private equity investments in infrastructure clocked a total of 130 deals in 2009 (194 in 2008), touching a four-year low, according to a report by Preqin, a London-based research house tracking the alternative asset class.
Between 2008 and 2009, annual infrastructure deal volume fell by 33% and infrastructure fund-raising saw an 82% fall.
“The decline in the number of deals can be attributed to a number of factors. At an industry level, fund managers were restricted by the severe contraction in debt availability, the lack of available assets with relatively simple deal structures, and sellers’ high asset valuations. Conditions were also difficult at a fund manager level, most noticeably the intense competition resulting from a record number of fund managers operating in the asset class,” said a Preqin statement.
The number of deals made by unlisted infrastructure fund managers peaked in 2008, with 194 investments made during the year, having increased each year from 2003 to 2008, adds the report. The deal-making was maximum in Europe with 79 infrastructure deals by PE fund managers to about 25 investments in assets in North America and 26 investments in assets in Asia and Rest of World.
The core infrastructure investments in energy saw the maximum deal making with 55 deals in 2009 followed by telecommunications (4), transport (30) and utilities (15) dominating the space. The four asset types accounted for 80% of the 130 investments made during the year.
Back home, a host of infrastructure-focussed funds concluded their fund-raising with India as the primary focus. These include Indian Infrastructure Fund, a project equity floated by IDFC, SBI- Macquarie Infrastructure Management Pvt Ltd, Actis and Asia Infrastructure Fund floated by StanChart IL&FS.
Indian infrastructure saw about five deals totaling investments of $53 million in 2009 against $52 million across four deals in 2008, representing an almost flat growth, according to VCCEdge data. The data covers core infrastructure companies engaged in the construction of core assets and does not include real estate companies. According to the VCCircle Deal Outlook 2010 survey, nearly 92% investors said, they will do more deals in infrastructure in 2010.