Spanish infrastructure flourishes; Italy hit by bureaucracy

The total value of Spanish infrastructure deals has risen to $49bn from $19bn in one year, according to data released by ratings agency Standard and Poor's. That sum included some private equity-backed acquisitions such as those of Candover-owned Applus+.

More recently, infrastructure players Fomento de Construcciones y Contratas (FCC) and Veolia have sold bus unit Corporacion Espanola de Transportes (CTSA) to Doughty Hanson. This followed Doughty's acquisition of Avanza, one of the main transport groups in the country and the buyout house's first deal in Spain.

Italy is also claiming an increasing share of the European infrastructure pie. The Macquarie Group is one of the main investors, owning a significant stake in Rome's Fiumicino and Ciampino airports. It has been at odds with a group of Italian investors over the sale of its 45% stake. The prospective buyer, Gemina, includes the Benetton family, finance groups Mediobanca, Capitalia and Generali, as well as buyout house Clessidra. The latter is no stranger to investments in the sector: it generated an IRR of 90% in 2007 by selling gas transport grid Societa Gasdotti Italia to ABN Amro's infrastructure fund.

In 2007, domestic bank Efibanca also launched its first infrastructure fund, geared at logistics and shipping buyouts, considered by the fund managers as the 'next big thing' in terms of infrastructure sub-segments.

However, the country's potential may be overshadowed by the unfavourable conditions for backing new infrastructure projects. Although EUR16.5bn has been invested in Italy by private equity funds in 2007, not all of them are interested in investing in new projects.

"Italy has accumulated a significant infrastructural deficit over time in comparison with other developed markets," said Marco Nicolai of Finlombarda. "There is a need for the public system to take action promptly to promote private investments in the sector," he added.

AIFI, the trade body, is also trying to stimulate activity in the sector, but recognises that the fact infrastructure funds are long-term, with lower rates of return, coupled with regulatory constraints imposed by the Government for new projects, constitutes a major constraint for growth.

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• Topics
• Performance
• Southern Europe
• Infrastructure