(Commonwealth)Europe) UK infrastructure financing is gathering momentum this year, with deals set to hit record levels as investors rush to secure assets and the government pushes forward with new projects. In the first eight months alone, about $38bn of debt was issued across 90 mergers, acquisitions, refinancing, and other deals, according to data from Infralogic. At this pace, the UK is expected to raise at least $57bn in infrastructure borrowing by the end of the year—matching or potentially surpassing the record set in 2021. Analysts believe the total could rise even higher, as many deals typically occur in the second half of the year.
The strong flow of deals comes despite concerns sparked by the crisis at Thames Water, which has been scrambling to avoid renationalization through a last-minute rescue attempt by creditors. While the episode rattled nerves, it hasn’t cooled investor appetite for essential services such as energy, water, telecoms, and waste. “The UK infrastructure market is robust, and even the troubles at Thames haven’t shaken the appetite for the essential regulated utilities,” explained Alexander MacLeod of Infralogic, adding that the government’s willingness to back private finance has reassured investors that opportunities remain strong.
Much of the draw for global financial players is the UK’s unique combination of steady, government-backed income from households paying for essential services, along with a policy framework that shields investors from the worst of potential losses. Investors also see momentum building in areas tied to long-term growth, such as renewable energy and digital infrastructure. Jessamy Gallagher of Freshfields noted that ports, which had seen activity stall during the pandemic, are now attracting renewed interest alongside energy transition projects.
So far, the biggest deal of the year has been Iberdrola’s $5.19 bn purchase of Electricity North West, which serves around 12 million people across a vast network of more than 170,000 km. The Spanish company, which already owns Scottish Power, is now the UK’s second-largest distribution network operator. Deals like this reflect how many infrastructure assets are maturing or coming up for refinancing after being financed during a period of ultra-low interest rates. According to Rob Morson of Pinsent Masons, the deal is helping fuel a steady wave of transactions that he expects to continue not just this year but into the next few.
Government policies have added further confidence. Planning reforms designed to speed up approval of new projects, alongside extensions of subsidies on renewable energy contracts from 15 to 20 years, have given investors greater certainty. The government has also pushed forward with projects in carbon capture, storage, and water infrastructure and has laid out terms attractive enough to draw new investors into the Sizewell C nuclear development in Suffolk.
The future pipeline is also looking busy. A pledge to use private finance for the Lower Thames Crossing and around £50bn worth of water projects has given investors more visibility on upcoming opportunities. Martin Bradley of Macquarie Asset Management described the recent moves as “positive steps” that point to constructive policies for growth, though he cautioned that it will take time for these changes to fully take root.
The government has already earmarked £22bn for carbon capture storage projects, including Italian energy company Eni’s $4.6bn Liverpool Bay initiative. This stands in sharp contrast to the United States, where skepticism about renewable energy policy under the Trump administration has limited investor enthusiasm. In the UK, however, the opposite is happening. Investors view renewables as a haven within the infrastructure space, supported by stable policy, the continuation of a national energy market, and a government that has signaled it intends to keep private capital at the heart of its plans.
