Brexit deal or no, U.K. infrastructure is still catching a bid
U.K. assets rallied on Tuesday amid hopes that a deal to exit the European Union might soon be forthcoming. But private money, as it has a way of doing, may have beaten the punters to the punch. A recent series of major U.K. infrastructure investments by long-term-oriented, private funds suggest a bullish contingent gathering pace, even without a formal deal in hand before the October 31 Brexit deadline.
Speaking at this week’s opening of the U.K. Parliament, Britain’s Queen Elizabeth II announced the unveiling of a National Infrastructure Strategy, which she called “a long-term vision to improve the nation’s digital, transport and energy infrastructure.” Her Majesty’s announcement follows the release last year of the first-ever National Infrastructure Commission’s report, which recommended sweeping structural improvements to the U.K.’s transportation, energy, telecommunications, waste and water works.
Big broadband bet
Digital infrastructure is central to this high-profile push. On Tuesday, private equity giant KKR announced that its $7.4 billion third global infrastructure fund had acquired a majority stake in Hyperoptic, the U.K.’s largest residential high-speed (gigabit) broadband provider, which covers 400,000 customers across the country.
Publicizing the acquisition, KKR European Infrastructure executives Vincent Policard and Cristina Gonzales said of Hyperoptic: “The business is strongly positioned to meet the growing demand for full-fibre services in the U.K. through further investment and national roll-out, supporting housing development and renovation. Our investment in Hyperoptic builds on KKR’s strong track record in telecommunications infrastructure in Europe, investing in and deploying next-generation digital connectivity.”
As reported in Data Economy News, an independent survey of senior IT executives by data center operator Equinix found almost half of U.K.-based IT managers it surveyed said uncertainty around a final Brexit deal has not impacted their company’s decision to invest in IT infrastructure.
Also this week, Equinix released the results of its annual Global Interconnection Index, which found that with 51% compound annualized growth forecast for this year, interconnectionbandwidth across Europe (including U.K.) could surpass expected growth in North America (46% CAGR), while still lagging growth in Latin America.
Posh airport deal
Private air travel is also catching a bid. Late last month, Macquarie Infrastructure and Real Assets (MIRA) announced that its sixth European infrastructure fund had acquired the U.K.’s only dedicated business airport, London’s Farnborough Airport, from a private consortium led by Luxembourg-domiciled TAG Group Holdings. Financial terms of the deal were not disclosed.
Macquarie has been an active investor in U.K. infrastructure for 30 years, having arranged more than £40 billion (roughly $51 billion) in British infrastructure funding since 2005.
The ownership transfer comes amid buoyant earnings growth at an airport venue that caters to the ultra-wealthy. On Tuesday, Farnborough announced a 23% increase in revenue to a record £80 million ($102 million) for its 2018 fiscal year, led by an increase of 4,000 business flights compared to the previous year. The solid earnings picture suggests that, with or without Brexit, U.K. air terminal demand from the corporate jet crowd continues to fly high.