The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Capital Markets

Infrastructure assets: Regulation, regulation, regulation

If any mistakes are to be made – either on the price paid for assets or the financing structure behind an investment – the sheer scale of activity in the UK regulated utilities sector means it is one place to start looking.

Behind infrastructure’s gold rush The £9 billion ($17 billion) buyout of BAA by Spain’s Ferrovial in March this year crystallized the changed attitude towards infrastructure among capital markets investors. Indeed, the deal took the market by surprise – particularly investors that had bought BAA’s €2.85 billion bond issue the week before Ferrovial revealed its hand. Several investors in that issue (which had no change of control clause) report that the company had dismissed any suggestion of a buyout during the roadshow, indicating that the company was simply too big to be bought out. Ferrovial’s move shows that in this credit environment no one is too big any more.

This is in no small part due to the kind of leverage multiples that infrastructure companies can now finance themselves at – the high teens. The BAA deal itself was predicated on a financing package that is a showcase for the changed appetite for utility-type regulated risk and the ability for this type of risk to be refinanced in the capital markets (see LBO sponsors look to ABS financing solutions, Euromoney October 2006).

Different industries

“This was one of the largest LBOs ever and the largest non-investment grade deal ever done in Europe (at £2 billion),” says William Cumming, managing director at Citigroup.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree