Cashflow-rich utilities drive deals ..

The markets are showing signs of revival, with utilities and energy leading the way. Most recently, F2i and AXA Private Equity teamed up to acquire an 80% stake in Enel Rete Gas from Enel Distribuzione. The EUR480m deal sees F2i take 75% of the capital and AXA Private Equity 25%. The sale process started in December 2008, via a controlled auction led by Morgan Stanley and Banca Intesa. Similarly in Portugal, Explorer Investments wholly acquired gas business Gasses Combustiveis (Gascan) SA from Babcock & Brown Infrastructure (BBI).

The uptick is the overdue result of what many had indicated would kickstart the market: distress. Enel's transaction saw the strategic investor divest a non-core asset while maintaining a 20% stake, likely in an effort to raise much-needed cash. The Gascan sale was triggered by Babcock & Brown's bankruptcy.

Data from unquote"/Private Equity Insight reveals that H1 2005 was the five-year peak for the utility and energy sectors, with EUR1.95bn invested across six deals in Europe. The take-private of UK-based East Surrey Holdings by Terra Ferma and the PAI-led LBO of Saur accounted for the lion's share of this value, though subsequent years have seen a steady increase in the number of deals.

Top transactions included the Rabo-led expansion of Dutch Econcern (EUR300m), which filed for voluntary receivership in May this year); First Reserve's buyout of Spanish Gamesa Solar (EUR261m); and HgCapital's investments in UK RidgeWind and Swedish 95.4MW Havnas - both over the EUR100m mark.

... and secondaries drive fundraising

Direct secondaries player Cipio Partners is the latest to raise money for the increasingly popular space, having held a first close of its sixth vehicle on EUR61m against a EUR200m target.

A recent issue of unquote" recorded a staggering $11bn raised for global secondaries. The sector is definitely one of the new favourites, with $100-140bn said to be up for sale. Some industry experts believe this supply exceeds demand, placing capacity to invest between $20-40bn.

In addition to dedicated direct secondaries players, some newcomers are expected to emerge in the space. Some primary GPs with dry powder are likely candidates, just as some funds-of-funds are also likely to join the LP secondaries bandwagon. Highlighting the latter, Morgan Stanley will invest approximately 10% of its $1.14bn fund (by number of investments) into secondaries over the fund's life. HarbourVest, a well established fund-of-funds, raised $2.9bn for its latest vehicle to invest in secondaries, and Wilshire's $615m eighth fund-of-funds will invest in LP interests.

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• Southern Europe
• Infrastructure