News & Analysis

The transformation of Europe

Infrastructure deals remain thin on the ground, but according to a market analysis from CVC Capital Partners, that is about to change.

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   Pre 2009 “Boom” 2009 “Transition”  Outlookpost
post-2009
Availability
of Credit		  • London a clearing house for Pan-European debt
• Multiple suppliers of credit		  • Limited bank underwriting
• Limited bank loan volumes and high margins		  • Local debt providers more important
• Bank debt serves as “bridge” to capital markets
Valuation
Metrics		  • High premiums to RAB and high EBITDA multiples  • Rebasing of valuations but vendors slow to adjust  • Valuations more attractive
• More realistic and robust base case scenarios
Capital
Deployed		  • Heavy focus on UK regulated assets
• Few deals in Continental Europe		  • Mix of UK and European opportunities  • Increasing focus on European infrastructure investment opportunities
Investment
Thesis		  • Targeted returns from gearing
and aggressive business plans		  • Take advantage of distressed
situations		  • Focus on careful asset selection, execution and active asset management
Execution  • Hotly contested auction processes
• Sale of 100% stakes		  • More bilateral negotiations
• Fewer investors prepared to “lead” transactions		  • Increased opportunity for partnerships and co-investments with governments
and corporates
  High transaction volumes
(c. €150bn) with focus on UK and on leveraged acquisitions		 Low transaction volumes reflecting
limited availability of debt, and vendor expectations		 Significant transaction
volumes reflecting growing need for private capital in European infrastructure


Source: CVC Capital Partners