The silver bullet? Other infrastructure work

While buyers of infrastructure assets have been cautious of late, Harris says there is still a significant potential deal flow in infrastructure M&A. “In the first half of this year, buyers seem to be taking time to identify good assets and acquisition activity will likely pick up in the second half of the year,” he says, adding that China and possibly Japan are likely to be the source countries for this kind of deal activity.

Farrands, meanwhile, believes that infrastructure M&A is less buoyant than in the past. “There is a clear appetite for investment in infrastructure, but with asset prices still decreasing we do not see transactions increasing until its asset prices are seen to be at the bottom,” he says.

“There is a significant liquidity problem. A lot of the project finance banks have had to be bailed out by governments and have their own issues”

James Harris, Lovells Lee & Lee

Another area Harris tips to pick up is the need for political risk insurance. “It’s becoming an integral part of many infrastructure projects in emerging markets such as southeast Asia,” he says. “People are looking at the risk profiles of projects, their home jurisdictions and issues such as the capacity to exchange currency freely – Indonesia and Vietnam are two countries where political risk insurers could become active again.”

ALB