MINT Countries: Infrastructure Deal Flow – October 2015

by Tom Begley

  • 22 Oct 2015
  • INF

MINT refers to Mexico, Indonesia, Nigeria and Turkey – the group that has been identified as the next emerging countries that have potential to see large transformations to their economy in the next 10 to 20 years. There are a number of common features within these four nations, including favourable demographics and key geographical locations for trade. For example, the populations of Mexico, Indonesia and Turkey have an average age within the mid-twenties, which is significantly lower than the UK average (40 years).

However, in order for these countries to reach their economic potential, there is a need for further infrastructure investment, particularly within the energy sector. Preqin’s Infrastructure Online service contains detailed information on over 278 completed infrastructure deals which have taken place within MINT countries over the past decade. Of these, 41% were for energy-related assets, 26% utility related and 19% transport related; the remainder took place within various social and economic industries.

Mexico accounts for 41% of all MINT infrastructure transactions in the past 10 years. Economic reforms have set out a clear path for future infrastructure investments in Mexico, which appear to be working; completed infrastructure deals in Mexico reached record reported deal values in 2014 ($5.1bn) and we have already seen $2.5bn of reported deal activity in 2015. The Mexican Government has been actively addressing the country’s lack of infrastructure, and has issued plans to invest MXN 3.9tn over the next five years, as well as to open the state-run oil and electricity markets to private investment for the first time in decades.

Indonesia accounts for 20% of infrastructure deals in 2005-2015 by MINT nations, although its greatest period of infrastructure deal activity was in 2007, when five transactions were completed at a value of $5.2bn. However, the financial crisis severely affected deal flow in Indonesia: between 2008 and 2010, only three transactions completed for just over $100mn. Despite this, recent years have seen greater levels of investment: since 2011, 39 infrastructure deals have completed for a reported $6.7bn.

Nigeria is currently significantly behind in terms of infrastructure investment and represents only 7% of completed infrastructure deals in the last decade for MINT countries. No more than three infrastructure deals have been completed annually since 2005, suggesting the country faces challenges ahead.

Turkey represents 32% of MINT deals completed in the past decade, with 89 transactions completed since 2005 for a reported aggregated deal value of $24bn. In this time, it is estimated that Turkey’s energy consumption has almost doubled, and meeting the energy needs of the population is of prime importance. Since 2012, three energy-related deals have completed in Turkey for over $1bn, including the $5.6bn acquisition of SOCAR Turkey Aegean Refinery by State Oil Company of Azerbaijan Republic and Turcas Petrol.

Although MINT economies do have demographic and geographic advantages, they will need to address a number of infrastructure challenges if they wish to convince investors of their sustainable growth potential.

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