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The infrastructure and project finance market is dynamic and challenging. In many regions, transport networks, high speed internet connectivity, schools and public building projects are in desperate need of investment. Public-private partnerships (PPPs) have enabled many jurisdictions to embark on ambitious infrastructure projects which may not have been possible otherwise.

UNITED STATES

Roald Nashi

Kirkland & Ellis

“Fundraising has remained strong for infrastructure over the last 12-18 month period. More funds are coming to market because investors continue to have the appetite for this asset class. Interest is driven in part by the fact that infrastructure projects are, for the most part, uncorrelated, which helps diversify investors’ portfolios. This asset class can also provide a steady income in the event of an economic downturn, which is perceived to be somewhat likely. However, there has been a relative slowdown in infrastructure deal activity over the past 12-18 months compared to the high levels of 2017, with the most notable decline in renewable energy and transportation deals.”

BRAZIL

Pedro G. Seraphim

TozziniFreire Advogados

“With the exception of power projects and airport privatisations, investment in infrastructure in Brazil has been slow in recent decades. Until recently, the country has had no sound policy to attract investment and thus there is a significant gap in infrastructure. However, since president Bolsonaro’s administration began, the efforts of the minister of economy, Paulo Guedes, have included a huge privatisation programme. The plan is to sell several already operating companies like Eletrobras, the listed company that owns bulk power generation, transmission and smaller renewable energy projects throughout the country, as well as to offer new concessions for various green and brown field infrastructure projects.”

ARGENTINA

Enrique V. Veramendi

Marval, O’Farrell & Mairal

“In Argentina, the infrastructure sector fared very well during 2017 and the first half of 2018 due to the stimulus provided to some new projects by the current administration. Since then, however, it has faced a series of daunting challenges. During 2018, the federal government awarded the first public-private partnership (PPP) project under the Federal Public-Private Partnership Contracts Regime: the Safe Highways and Roads Network PPP Programme – Stage 1. In 2019, the government launched a second project under the PPP regime, the PPP Transmission Lines Project – Stage 1, for the construction, operation and maintenance of a 500 kV extra-high voltage transmission line and five substation links which are intended to support the increase in the renewable and thermal power capacity in the country.”

PERU

Alfredo E. Cahuas

Mazars

“Since passing its Concessions Law in 1991, Peru has had a very active infrastructure investment programme in which the private sector has played a key role. But the recent Lava Jato case, the corruption scandal involving Brazilianbased companies offering bribes worth hundreds of millions of dollars to government officials across Latin America, has had an impact on new investments in Peru over the past three years. While Peru did not receive the largest sums of bribes, it has prosecuted, or is in the process of prosecuting, the highest number of senior government officials, including former presidents.”

UNITED KINGDOM

Matthew Hardwick

Norton Rose Fulbright

“Historically, the UK infrastructure sector has been regarded as one of the most desirable investment environments in the world. However, recent political uncertainty and changes in the approach of regulators have contributed to an environment in which the quantification of risk has become more difficult for private sector participants in some cases, leading them to retract from the market. Also, there has been a reduction in the number of traditional infrastructure projects coming to market.”

SPAIN

Joaquín Sales

King & Wood Mallesons

“Public investment in infrastructure grew throughout 2018, and that growth is expected to continue throughout 2019. However, the level of growth recorded is not expected to reach the levels seen in 2008, prior to the global financial crisis. Significant investment has gone into high-speed rail networks, though renewable energy projects are attracting greater levels of private sector investment. 2019 has seen growth of up to 5 percent in the renewables sector, and even more growth is expected going forward. Currently, renewable power infrastructure is the main focus of infrastructure project finance.”

POLAND

Andrzej Debiec

Hogan Lovells LLP

“In Poland, the infrastructure sector has benefitted from the availability of EU funds under the Multiannual Financial Framework 2014-2020, as well as from the healthy economic condition of the country. There are a number of ongoing road and railway projects. It is estimated that approximately 500 kilometres of roads will be completed by the end of 2019. Public procurements for new road projects are still anticipated and the railway sector is also developing rapidly. Several new contracts were signed in 2017 and 2018 and, according to the National Rail Programme, new railway projects will soon be announced.”

RUSSIAN FEDERATION

Roman Churakov

Herbert Smith Freehills CIS LLP

“The infrastructure sector in Russia needs significant redevelopment as, according to official data, the average level of infrastructure depreciation is about 60 percent. Although the development of infrastructure in Russia remains one of the top priorities for the state, economic slowdown, political risks and the lack of foreign direct investment (FDI) has negatively impacted the market. In 2018, investment in the infrastructure sector reached 5.9 percent of gross domestic product (GDP). Last year, the state declared that it would re-channel resources to infrastructure, and the government has developed and adopted a comprehensive plan for transport infrastructure modernisation and expansion, based on the spatial development strategy.”

SINGAPORE

Nick Merritt

Norton Rose Fulbright (Asia) LLP

“The market in Asia seems to be going through a transition, having previously relied heavily on thermal independent power producer (IPP) projects. While there are a few of these projects still around, the successes of the last 12- 18 months have included large-scale renewables, particularly in Taiwan, and some petrochemical or industrial projects, such as RAPID in Malaysia. Across the region there is a lot of interest in solar and wind, including some floating solar and offshore wind.”

SOUTH AFRICA

Bruce Engelsman

SRK Consulting

“There is generally a more positive outlook in the infrastructure sector than 18 months ago. This may be driven by the change in the presidency of South Africa and the successful national elections of May 2019. The government is being seen to be tackling the corrupt practices that came to light during the previous presidency, but the financial damage caused has constrained the funding of infrastructure projects from government institutions. The turmoil in the mining industry, including major dis-investment in certain sectors by some of the large mining houses and the consolidation of their mining portfolios, seems to be dissipating, with new mining infrastructure projects kicking off.”

CONTRIBUTORS

Herbert Smith Freehills CIS LLP

Hogan Lovells LLP

King & Wood Mallesons

Kirkland & Ellis

Marval, O’Farrell & Mairal

Mazars

Norton Rose Fulbright

Norton Rose Fulbright (Asia) LLP

SRK Consulting

TozziniFreire Advogados