Third Bridge webinar: private equity’s infrastructure outlook

During our recent webinar Third Bridge Co-founder, Joshua Maxey, Peter McNally, Global Sector Lead for IME at Third Bridge, and Harriet Matthews, Funds Editor at Mergermarket, discussed private equity (PE) deal flow in 2023 and how investors see the current infrastructure opportunity.

One of the main findings of our 2023 PE outlook was that over three-quarters (79%) of US PE managers expect greater PE activity across energy, infrastructure and resources over the next 12 months (see image below). 

Interestingly, infrastructure was also the sector with the second-largest bid-ask spread (after technology). This was particularly pronounced among larger funds (last fund worth USD 5-10bn) where 36% of firms held this view vs 8% of those in the USD 500m-1bn segment. 

As Peter noted in our report, “we see a consistent logic behind the survey results”. Not only can they be explained by factors such as commodity price volatility widening bid-ask spreads, but activity also appears to be concentrated among the PE larger players. Many of these funds, as our panellists discussed, are increasingly diversifying and buying infrastructure platforms.

Why infrastructure, why now?

Despite infrastructure being an asset class that typically has stable and predictable cash flows, macroeconomic headwinds and demand for new types of assets have given investors a lot to consider in recent years. 

As Joshua noted, PE investors recognise the asset class’ role in the energy transition as a potentially lucrative opportunity. Although higher borrowing costs mean relative value is arguably tighter today than in previous years, inflation-linked revenue is still an attractive component in some sectors, he said.

Harriet noted that in Europe PE has raised USD 153bn YTD in the infrastructure space, “so there is a huge amount of opportunity”. Institutional investors’ increased appetite for exposure to this asset class at the primary fund level also reinforces the momentum we are seeing. CVC’s acquisition of DIF Capital Partners1 and Bridgepoint’s acquisition of Energy Capital Partners2 – both in September 2023 – were among the recent deals highlighted during the discussion.  

However, that isn’t to say there aren’t any challenges. As our 2023 PE outlook notes, commodity prices have been volatile in recent years, creating a difficult selling environment in the energy sector. But with legislation including the Inflation Reduction Act having a dramatic impact globally, renewables at large are expected to continue gaining share (although perhaps not at the same pace in all industries).

Infrastructure will be needed regardless, and our panellists agreed that investors can expect a high level of interest and private investment in infrastructure in 2024 and beyond. Discussing water utilities in the UK specifically, Peter said: “There are big investments that need to happen and our estimates are that CAPEX has to be 50% higher.”

During our webinar moderated by Dan Thomas, VP at Third Bridge, the panellists discussed some of the dynamics shaping the infrastructure landscape, including:


  • Increasing costs of capital/financing (with some capital providers shunning fossil fuels altogether)
  • Volatility in commodity prices
  • High levels of debt in some infrastructure sectors
  • Geopolitical tension causing macro uncertainty 
  • Changing regulations making it easier to invest in some sectors (e.g electric power) but harder to invest in others (e.g water utilities)
  • Bifurcated asset flows (large players taking a bigger slice of the pie)
  • Higher inflation-driven risk in some sectors
  • Supply chain challenges
  • Capital deployment delays due to confusion around Inflation Reduction Act fine print


  • Inflation is seen as a hedge for some sectors
  • The potential for GP-led secondaries 
  • How some deals are still transacting at high valuations, particularly where there is a green transformation case 
  • More opportunities as a result of increased government intervention
  • The requirement for utilities to increase renewables as a percentage of their portfolios
  • Decarbonisation/the energy transition demanding new types of assets
  • Legacy assets such as roads requiring modernisation
  • Momentum in high-growth areas such as data centres 

The panellists talked about some of the risks and opportunities these headwinds and tailwinds are presenting today, and how they might play out into 2024 and beyond. 

Related Transcripts and Research

The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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