Investors ‘taking a breather’ from infrastructure dealmaking

afr.com:

Rising interest rates are damaging investment sentiment, curtailing the number of infrastructure assets auctions, leading to some investors to say that they are “taking a breather” from dealmaking.

Macquarie Asset Management’s Ani Satchcroft, who runs infrastructure investment for the group’s real assets business, said investment activity had faltered compared with between 18 and 24 months ago, when it felt like “investments were coming to the market almost every week.”

Macquarie’s Ani Satchcroft (right) told James Thomson (left) that the Vocus Group bid for TPG Telecom’s assets was “very complex.” Peter Rae

“Things have been slower in the last 12 months,” Ms Satchcroft told The Australian Financial Review Infrastructure Summit on Monday. “You’re not seeing as many straightforward auctions.”

Investments that had a “higher level of complexity,” including carve-outs and deals negotiated via relationships, were still happening but at a slightly slower pace, she said. This was partially due to a “mismatch in expectations” between the prices sellers want and buyers are prepared to pay, she added.

However, plans for one complex acquisition – the Vocus Group’s $6.3 billion bid for TPG Telecom’s fibre networks – collapsed over the weekend. The Vocus Group is half-owned by MAM, with Aware Super owning the rest.

Ms Satchcroft said the mooted acquisition was “probably proved a little bit too complex” and that Macquarie needed to be disciplined on the commercial risks it was taking. “In this case it just doesn’t quite work.”

While Ms Satchcroft said there could possibly be a simpler version of the abandoned acquisition down the track, Macquarie hadn’t yet considered that possibility, she said, indicating the TPG assets required