Within the Asia-Pacific region, Australia accounts for the largest number of infrastructure deals completed since 2008. Preqin’s Infrastructure Online service features information on 339 Australian infrastructure deals since 2008, significantly more than the 238 deals completed in India and 103 deals in China. Last month saw the second largest deal take place in the country over this time period, the AUD 12bn acquisition of Asciano by a consortium comprising Brookfield Infrastructure Partners, GIC and British Columbia Investment Management Corporation. Asciano is a rail and port logistics operator that handles nearly half of all container traffic entering or leaving Australia.
As shown in the chart above, the number of infrastructure deals in Australia hit a low of 24 in 2009 due to the global credit crisis. However, recovery was prompt, with an average of 50 transactions taking place annually until 2014. Reported aggregate deal size surpassed pre-crisis levels last year ($32bn) despite a lower number of completed deals. Consequently, the average transaction size has increased from $536mn in 2009 to $975mn in 2014. So far in 2015, average deal size stands at just over $1bn, indicative of the rising valuations for infrastructure assets.
Since 2008, energy and transportation have been the dominant sectors for Australian infrastructure deals, with deals involving energy infrastructure assets accounting for 32% of the total number of deals, reflecting the energy export-dependent nature of the Australian economy. In the same period, the transportation sector accounted for 28% of deals.
Half of Australian infrastructure deals from 2008 to 2015 were made by domestic investors, with non-domestic investors predominantly based in Japan, Canada and the UK. With the five-year AUD 5bn Asset Recycling Initiative in place to support Australia’s privatization endeavours, the country should see healthy demand in its infrastructure sector, and there has already been a sizeable increase in PPP projects from 2013. New South Wales government-owned TransGrid is one of the assets lined up for the initiative that has attracted bids from prominent institutional investors and fund managers based in Australia, China, Canada and Singapore.