UK infrastructure financing deals are on track to reach a record high this year as investors compete to secure assets while the government signs off on a number of major new projects.
According to analysis from data provider Infralogic, roughly $38bn (£28.13bn) of debt was issued in the first eight months of this year on 90 mergers and acquisitions, refinancing and other deals.
This rate of monthly issuance puts the UK on a path to raise at least $57bn in infrastructure borrowing by the end of 2025, matching the record high the economy recorded in 2021.
However, Infralogic noted that a significant amount of deals are typically registered in the second half of this year, suggesting the amount of debt raised this year is set to break the previous record high.
Private finance commitment
The UK government’s renewed commitment to private finance has been credited with reassuring investors of UK market possibilities.
Key global financial players are drawn to the market by reliable, government-backed income from UK households for essential infrastructure, including water and energy.
Generous state support, such as financial guarantees and subsidies, also promises to protect investments from large losses or risks.
Jessamy Gallagher, co-head of energy and real assets at law firm Freshfields told the Financial Times: “We’ve seen a notable uptick in deal activity over the past few months, continuing the trend of vast amounts of private capital looking for deployment opportunities.”
Gallagher added that energy transition and digital projects were popular with investors as well as GDP-linked assets such as ports.
The largest deal cemented so far this year was the $5.19bn sale of Electricity North West to Spanish provider Iberdola, who already owned Scottish Power.
Rob Morson, infrastructure partner at law firm Pinsent Masons, said he expects a “steady momentum” of deal volume for the rest of the year and into 2026.
Planning reform and renewables
Similarly, a recent wave of planning reforms aimed at speeding up approval for infrastructure projects, have also boosted investor confidence.
The incoming Planning and Infrastructure Bill pledges to streamline planning processes and reduce bureaucratic delays which stalled development in the past, while the 10-year infrastructure spending strategy promised £725bn of government funding.
The UK’s stance on renewable projects has also encouraged investors.
The decision to extend subsidies on contracts for different schemes from 15 to 20 years, has given investors certainty on the price they will receive for energy produced by wind and solar farms.
Meanwhile, the government has earmarked £22bn for carbon capture storage projects, including the Italian energy provider Eni’s $4.6bn Liverpool Bay development, and pledged £50bn for water projects.
Labour’s position is a stark contrast to the Trump administration’s, which is sceptical about the renewable energy market, leading many global investors to pivot to the UK.
Minal Patel, global head of infrastructure at Schroders Capital, said: “Investors are seeing that supportive government policy and the decision to retain a national energy market across the UK provides a stable backdrop for investment.”