Global economic conditions have improved, and global infrastructure investment rose, in 2013. But at the same time PPP investment declined, particularly for new-build projects with high construction costs. As a result, the global PPP market is now in its third year of decline, and the number of project financings to close in the market continues to fall.

A series of short analyses of pricing in select regions and sectors

In 2013 the global infrastructure finance market recovered as both deal value and deal count went up. IJ records show that the total investments in global infrastructure reached US$280 billion, which was a 51 per cent increase from the preceding year. A total of 548 deals reached financial close, up by 30 per cent.

ECAs and DFIs have long been a staple of the infrastructure finance, supporting and supplementing commercial lending where appropriate. However, in a slow post crisis economic climate these institutions have become ever more prominent in global energy and infrastructure projects.

Among the multitude of infrastructure market stakeholders, sponsors/equity investors play a particularly significant role. Equity backing for projects has always been a vital component in developing infrastructure assets, where traditionally industrial construction style companies invest into equity and raise additional funds to cover project costs in the form of project finance debt.

So far this year corporate finance has been dominated by two huge deals that have caused a massive, but perhaps misleading, surge in overall volume figures. This fact notwithstanding, the year has also revealed some interesting trends, with a promising pipeline of oil & gas transactions in the US and intriguing opportunities in European renewables.

So far 2013 has been a mixed bag for project finance: whilst the overall volume of global investment has increased to the highest levels since H1 2008, deal activity has slumped again, falling to 199, down from 230 over the same period last year

Overall the total direct equity invested into project finance transactions in 2012 fell to around US$31 billion, down from US$44 billion the year before. Within that only tax equities recorded a rise, with cash equity declining by 15 per cent, grants by a massive 99 per cent and equity bridge loans decreasing by 48 per cent.