The Infrastructure Deal Landscape in China – March 2016

by Ryan Soon

  • 15 Mar 2016
  • INF

Despite slowed economic growth in recent years, infrastructure deal activity in China has been on the rise. Preqin's Infrastructure Online contains detailed information on 133 completed infrastructure deals in China since 2008, for an aggregate value of $12bn. As seen in the chart below, 2010 saw highest amount of deal flow, with 38 transactions completed, although reported aggregate deal size has been more than doubling annually since 2013, reaching record levels in 2015 ($3.6bn). This, in part, is due to two large transactions involving Hong Kong-based United Photovoltaics Group in 2015, which jointly invested CNY 9bn with Huaxia Life Insurance in the United PV Chinese Solar Development Project, and the acquisition of the 930 MW Hareon Solar Portfolio for CNY 8.8bn from Hareon Solar.

China’s rising population and growing urbanization has seen the largest proportion (42%) of deals completed in the utilities sector since 2008, followed by deals in energy (30%) and transportation assets (11%), which are essential in supporting the country's huge demand. The majority (66%) of transactions were for secondary stage assets, with 26% at the greenfield stage of development. With the Chinese Government’s pledge to direct more capital and approve more projects to escalate infrastructure construction, more greenfield projects – particularly in the transportation, energy and utilities sectors – could well be in the pipeline. 

In its efforts to bolster its infrastructure expansion, China has embarked on its "One Belt, One Road" initiative, which aims to augment China's infrastructure development in order to improve trade and economic relations, as well as connectivity with its neighbouring countries. The newly established Asian Infrastructure Investment Bank will provide financial support for infrastructure projects as part of China's Silk Road ambitions, which will likely boost deals in the domestic economy and the surrounding region.

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