Solomon Partners’s Tim Bath Featured in Inframation News

Managing Director and Head of Solomon Partners’s Infrastructure Advisory Group Tim Bath discussed the infrastructure M&A market in Inframation News.

Mr. Bath noted, “The market is buoyant from an activity perspective and there is an abundance of capital looking for a new home.”

Read the full article below.


Inframation staff explored the rise of both energy and telecom driving brownfield activity, while multiple US P3 projects neared their final stages of financial close signifying that 2018 could be a big year for that market.

Deal flow in Canada has rebounded to 2015 levels with a total of USD 22.04bn and 50 deals reaching financial close in the first nine months of 2018. The first nine months of 2017 and 2016 both recorded a deal value of USD 8.04bn and USD 9.64bn respectively, whilst 2016 came in at USD 21.27bn.

As a country, Canada is the fifth most active in 2018 accounting for 6% of global deal value, up from 3% in 2017. The third quarter of 2018 was particularly busy in Canada recording six of the top ten largest deals closed in June, July and August. In the year to date Transport is the largest sector by deal value accounting for 56% of activity, up from 20% in 2017. Renewables stays flat at 25% of activity, whilst power fell to 12% in 2018 from 35% in 2017. Social and Environment declined to 6% and 1% respectively.

In 3Q18, in the US, USD 14.43bn deals reached financial close in M&A, as opposed to USD 8.91bn 3Q17. There were no financial closes in US P3 market in 3Q18.

The power and energy generation sector made up the bulk of this quarter’s transactions in US and Canada, comprising roughly 69% of all closed deals, representing some USD 21.1bn. More than half of those, or USD 14.07bn according to preliminary data, were brownfield transactions, which include M&A deals. Refinancings made up 16.6%, or USD 3.51bn, while greenfield deals made up 16.7%, or USD 3.52bn.


No significant projects reached financial close in 3Q18, but multiple projects could reach that milestone in 4Q18 as preferred proponents were picked for LAX Consolidated Rent-A-Car (ConRAC) project, I-75 Modernization project and Purdue University student housing.

Meantime, rail transit and university projects advanced. This included the Honolulu Rail Transit project getting civic approval, while the New York City Transit (NYCT) is considering using a P3 as part of a ten-year, system wide subway modernization program. A P3 would be used to install a state-of-the-art signal system

Looking ahead, KeyBanc Capital Markets infrastructure head and managing director Thomas Mulvihill said Los Angeles will likely be a focus of P3 activity, noting Metro’s ongoing P3 program. Also, he said he hoped a major social infrastructure P3, the Los Angeles Street Civic Building, which is to begin procurement in this year’s fourth quarter.

Marc Lemon, Partner in the Infrastructure and P3 Group at Nelson Mullins told Inframation that the last quarter showed an increasing level of interest and activity in airport, water, fiber and university related projects.

He also said there is a “very strong interest from foreign entities in the US P3 market and more particularly on how to engage within the US P3 market, whether that be through acquisition of US companies engaged in the P3 market, direct investment in projects, or on a technical level.”

Lemon also express Congress to once again tackle infrastructure in 2019 once the mid-term elections have played out after the proposed federal infrastructure bill failed to advance earlier this year. “The President remains very committed to infrastructure and will likely give strong consideration to any reasonable bill that can survive reconciliation.”

Key things to be on the lookout for include changes to the federal fuel tax, expansion of existing programs like TIFIA, asset recycling, devolution of responsibility to the states from the federal government, new sources of revenue or taxes, and privatization or disposition of federal assets, buildings and lands.

US airports will also continue to see a significant amount of private investment, added Mulvihill. St. Louis Lambert Airport is considering full privatization, while others are likely to see robust private investment in discrete aspects of airport operations such as terminals and people movers as opposed to a complete privatization.


The drive for telecom, energy and services businesses drove a very heated M&A market. This included a six week spending spree over the summer by Brookfield Infrastructure which included acquisitions of Western Canadian midstream assets, AT&T’s data centers and Enercare, a residential Canadian services provider. These deals are expected to or have closed in 4Q18 and are not included in the 3Q18 League Tables data.

“The market is buoyant from an activity perspective and there is an abundance of capital looking for a new home,” said Tim Bath, managing director and head of PJ Solomon’s infrastructure group.

The trend is not expected to abate any time soon as the likes of ISquared and Stonepeak closed their respective USD 7bn plus funds, while Global Infrastructure Partners and Brookfield Infrastructure are in the market with plus-sized USD 20bn funds in the market, said an industry advisor.

This will include “business that carry attributes such as forecastibility of cash flow which ticks the box of a core plus infra asset,” added Bath.

This extended this past August to West Street Infrastructure Partners III’s buyout of automated cooking oil solutions business Restaurant Technologies. The company owns a network of 41 oil depots serving 25,000 customer locations, including major restaurant franchises. These restaurants typically sign 5-10 year contracts for this business.

Power-US and Canada

Some large acquisitions announced in previous quarters reached close and in some cases signed parallel debt financings. Global Infrastructure Partners closed its acquisition of NRG Energy’s renewable energy platform this quarter, also signing a USD 425m holding company-level debt backing the purchase. ArcLight Capital Partners closed its USD 1.12bn acquisition of Midcoast Operating, a midstream unit owned by Enbridge, and also sealed a USD 600m term loan B to support the deal.

The largest greenfield financing to close in the sector was Advanced Power’s 1.2GW South Field Energy gas-fired project in Ohio. The total financing added up to USD 1.3bn, including a USD 470m floating rate debt tranche and USD 150m in fixed-rate debt. Fourteen banks participated in the deal, which brought in some new names such as Israeli investors Atudot Pension Fund and Clal Insurance, and Korean asset manager PIA Investment Management.

Refinancings and recapitalizations made up a substantial volume of closed deals, including sPower’s USD 498.7m solar portfolio refinancing in the private placement market.

The Carlyle Group’s USD 363m bank market refinancing for the 594 MW Rhode Island State Energy Center gas-fired power plant, which closed 20 July, was notable for the so-called toggle feature, which gives the sponsor the option to sign a hedge or take merchant exposure after the tolling agreement expires.


In September the Gordie Howe Bridge procurement successfully reached financial close using a bank-and-bond solution. Grupo ACS, Fluor and AECON were the winning consortium who brought an almost three-year procurement, to a close that included a funding dispute between the US and Canada, a rival bridge owner challenging its legality, affordability concerns and also a national security issue associated with the Chinese-state ownership of Aecon. If Hanks and Spielberg were to collaborate on a motion picture of a P3 procurement, this would surely be it. In 2018 the deal is the second largest greenfield PPP globally, behind only the USD 3.65bn Canakkale Bridge in Turkey.

Canada’s Greenfield PPP market has been the second most active in the world in 2018 with 12 deals valued at USD 5.5bn. Canadian greenfield PPP activity accounts for 16% of global activity in the year-to-date. The year-to-date figures represent a marked difference on 2017 where nine deals valued at USD 1.58bn were recorded.

Canada-Brownfield, refinancing and capital markets activity

In the three-month period there were three large brownfield deals to reach financial close. In June NextEra Energy Partners reached financial close on the sale of 396MW in renewables assets to CPPIB for USD 1.63bn. The following month, Enbridge completed the sale of 49% of its onshore renewable assets to CPPIB also for USD 1.05bn. Finally in August BC Hydro completed a USD 917m acquisition of Tech Resources 66% stake in Waneta Dam in British Columbia.

Overall Canada ranks as the eighth most active brownfield market globally in 2018, down a place from seventh in 2017. In the first nine months of the year deal, value totaled USD 7.69bn across 26 deals. This compares favorably to the 2017 return of 12 deals valued as USD 4.37bn.

Refinancing activity in Canada was recorded as USD 3.83bn across nine deals in 3Q18, ranking the country as the sixth most active globally. In 3Q17 a total of eight deals were recorded valued at USD 1.15bn, positioning the country as the 19th most active market.

A notable refinancing transaction of the quarter was the Canadian Infrastructure Bank’s loan to CDPQ’s REM light rail project in Montreal. In August the CAD 1.28bn, 15-year senior secured loan marked the bank’s first investment August the CIB made its first investment. Another notable deal was the USD 920m refinancing of Autoroute 30 by CIBC, HSBC and RBC.

The increased deal count and deal value in 2018 has contributed to Canada placing as the fourth most active capital market with a deal value of USD 3.32bn across 11 deals. Canada’s 2018 return accounts for 12% of global activity in the first nine months of 2018 compared to only 2% the prior year. RBC is the top capital market bond arranger with six deals and a deal value of USD 1.33bn. The Canadian bank sits fourth globally with nine deals and a value of USD 1.63bn.

Canada’s Sun Life is the top bondholder by deal count in 2018-to-date. Sun Life hold the notes on five transactions including Kansas Prison P3, Rotterdam World Gateway Refinancing, Grangegorman Development Scheme, New Toronto Courthouse and Holtwood and Wallenpaupack 292 MW Hydroelectric refi.

Total loans in 3Q18 for Canada totaled USD 5.44bn, almost double the USD 2.77bn recorded in 3Q17. Globally Canada is ranked as the 10th most active loan market, up from 13th in 2017. RBC is also leading the way with a total of USD 1.06bn across six deals.

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