PE firms seeking to attract a broader range of bidders to portfolio company sales should assess the changing needs of infra-investors.

By Tom D. Evans, John Guccione, Brendan Moylan, David J. Walker, George Venables, and Catherine Campbell

As the boundaries of what constitutes “infrastructure” assets have blurred in recent years, PE firms are more frequently encountering specialist infrastructure investors in transactions beyond asset classes traditionally viewed as “core” infrastructure, such as utilities and roads. This growing trend is evident in Antin Infrastructure’s successful sale of medical diagnostics business Amedes Group to buyers including OMERS Infrastructure and a consortium of investors, as well as Arcus Infrastructure Partners’ acquisition of crates and pallets business HB Returnable Transport Solutions. With certain infra-investors now branding themselves as “private equity infrastructure” and multiple PE houses seeking or raising infrastructure funds, these crossover deals are likely to attract attention from both PE firms and infrastructure investors for some time.

Specialist infra-investors and PE firms are more similar than dissimilar, however, growth outlook and investment horizon present fundamental differences that can complicate deals. This makes a detailed understanding of differences and careful consideration of opportunities for collaboration and competition essential for executing this new type of crossover transaction.

Presenting predictability

The presence of features attractive to infra-investors in assets outside infrastructure’s traditional scope presents an opportunity for PE firms seeking to realise assets in a range of sectors, such as healthcare and data storage. PE firms that wish to attract this broader spectrum of bidders to portfolio company sales need to assess if the asset class ticks the boxes for infra-investors by focusing on stabilised growth and defensible cash flows. This can include regulatory barriers or asset scale that is unlikely to be easily or cheaply replicated. Long-term contracts that have a high availability component (i.e., when the supplier is paid to make the infrastructure available and when customers take volume risk) will further enhance the attractiveness of an asset to infra-investors.

Navigating management incentivisation and exit expectations

Core infrastructure assets tend to have limited capacity for growth, which, when combined with the long (even indefinite) investment horizon of a core infra-investor, makes them unsuitable for a typical PE-style management incentive plan. However, when infra-investors look beyond core assets, they are frequently faced with demands from management to implement PE style incentive structures. This is especially true when acquiring from PE houses and/or when competing with PE houses in auction processes. In those circumstances, the challenge for deal teams is to reconcile management’s expectations on exit timing with the longer hold period for a typical infra-investor.

Recent transactions have addressed this by granting management the opportunity to realise some, but not all, of their investment before exit during an annual exercise window. This is frequently by way of a put option over vested shares (in accordance with a vesting profile) at a price determined by reference to the investor’s own valuation. In some deals, we have seen the institutional investor retain a call; which may be at a premium to the put.

A tailored ask

Evolving deal term expectations mean that dealmakers also need to consider their ask on regulatory conditions. The extension of hell or high water (HOHW) clauses (which commit a buyer to undertake all actions required by a regulatory authority to obtain clearance) to “all affiliates” has historically been more common for infrastructure deals (especially for “core” assets) when the risk of regulatory intervention was minimal given the monopolistic nature of such assets. However, as the scope and nature of the assets targeted by infrastructure funds has broadened, their approach to HOHW clauses has become closer to — if not indistinguishable from — that adopted by PE firms. Infrastructure buyers will now more frequently seek to limit the application of the HOHW to a much narrower group of entities, where structure and competitive dynamics allow.


The trend for infra-investors to look beyond core infrastructure assets to “infra-like” assets will necessitate ever greater interaction — and competition — with PE firms. This ongoing crossover presents both opportunities and challenges for PE as infra-investors think creatively about relevant asset targets.

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