Gruelling seven months in infra
It’s been a rough first half to the year, a gruelling seven months that’s taking a hefty toll on the IJGlobal team. The pressure of publishing our Funds Report and League Tables – hot on the heels of our Canada infrastructure conference – has put years on the editorial team.
The Whistler event – IJCanadaInfrastructure19 (snappy, eh?) – was a howling success with the Canada Infrastructure Bank defending itself vigorously against allegations that they would “crowd out” rather than “crowd in” capital.
To be fair, Nick Hann did an excellent job defending his fledgling organisation, but you can’t help but wonder why one week later he’s no longer in the job… less than a year since he started! Pretty sure it wasn’t anything he said in Whistler! He was ably supported in the defence of CIB on the panel by John Casola – who is now the new (interim) Nick – and Charles Todd.
Perhaps the biggest question was – will the CIB even exist after the October elections. Time will tell on that front… as it will on the “crowd-in” element which it espouses in the mandate... which looks like they'll end up financing what nobody else will touch with a barge pole.
As always, whenever you have a procuring authority on the stage, delegates remain behave impeccably – while landing sucker punch after sucker punch through our Slido system (which lets them to post anonymous questions to the panel).
Our brave speakers from Infrastructure Ontario and Partnerships British Columbia – John Traianopoulos and Mark Liedemann (correct spelling, which makes a nice change from his experience at the event) – rolled with the punches and came back with “it will be what it will be”.
It was a lively/tiring event for the IJ team as the DB-DBF-DBFM-DBFOM war was waged on stage with no conclusive answer. To access a PDF on the Canadian infrastructure market compiled by our stellar data team, click here…
And then there are quarterly reports
This week, we published our quarterly IJInvestor Funds & Investors Report identifying all global infrastructure fundraising and M&A activity in the first half of 2019.
And the good news is that $41.4 billion was raised in H1 by unlisted infrastructure funds, setting 2019 on the right path to matching, or exceeding, 2018’s market high of $103.6 billion amassed in a full calendar year.
Just what the market needs… a few more bricks of money added to the gargantuan wall of cash that is targeting infrastructure and energy around the world… most of which is targeting Europe and North America.
A repeat trend is that the vast majority of this capital is targeting equity. With the continuing lack of investment opportunities, this will lead funds to chase valuations to unsustainable levels and promote the continual re-trading of assets. What could go wrong?
Most funds are targeting conventional power and renewable energy, which is pretty much in line with everyone’s thinking. However, the first half witnessed a significant shift towards digital activity in both M&A and fundraising.
This is not a permanent market shift, but reflects significant activity in the digital M&A space which will be hugely bolstered by Florida-based Digital Colony closing its maiden fund Digital Colony Partners slightly above its hard cap at $4.05 billion.
Everything here is broadly in line with expectations and it reads like early chapters in the Book of Revelation. We’re all doomed…
And then there’s the IJGlobal league tables…
Let’s stick with project finance for a quick look at the league tables as “infrastructure finance” is too broad a brushstroke to say anything meaningful – apart from: “Ooooooh, that’s a lot of money.”
In the infrastructure/energy PF world, a total of 364 transactions (most of them in Europe, and many of them refi) closed in the first half of 2019 with combined valued of $109.87 billion – the biggest deals were closed in North America and were in the energy sectors.
Needless to say, the North American deals were bolstered by the oil and gas sector with the $2.6 billion refi of Sabine Pass LNG and Creole Trail Pipeline, followed closely by the refi of the $2.5 billion for Dakota Access Pipeline.
Chunky stuff and not what the ESG folk would like to see… but it’s one of those dirty little secrets of the infra world – O&G activity continues to be a mainstay of the market and shows no sign of tailing off.
As much as you bang the renewables drum, there’s a constant flow of cash into O&G… though, granted, the above cases are far enough from being upstream to keep many lenders comfortable.
However, let’s give the renewables sector its due – the largest transactions to reach financial close in H1 2019 were the $4.6 billion DEWA solar stage IV in Dubai, and the $2.98 billion Yunlin offshore wind farm in Taiwan.
These data point stands out for two reasons – renewables (duh) and they’re not in the West.
Plenty of reasons to take heart…
You know, there are plenty of reasons to take heart… but just as many to lead one to contemplate suicide.
But for now, as we stare into the void that is July and August and mull joining southern Europe by taking a holiday, you’ve just got to smile and remind yourself: “It’s a bloody mess out there.”