What is Infrastructure Investment Banking? Why You Should Consider This Career Field

What is Infrastructure Investment Banking?

According to Goldman Sachs’ Brian Bolster, the traditional infrastructure asset class is associated with “bridges, toll roads, ports,” which produce consistent and low-risk dividends.^[1] However, in recent years, the definition of the asset class has expanded to investments that offer higher returns and higher risk such as: “data centers, energy infrastructure, pipelines, and renewable projects.” This infrastructural asset class is capital intensive and has a high barrier to entry, which creates a hyper-competitive market. 

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Role of an Investment Banking Analyst in Infrastructure Investment Banking:

The role of an investment bank is to raise capital for governments, companies, and other organizations and is responsible for executing deals on acquisition, merger, or sale, which helps investors to save time and money. The investment bank offers clients many different services or products including mergers & acquisitions, equity capital markets, debt capital markets, and leveraged finance. For analysts working in the infrastructure coverage group, the investment banking analyst must focus on the health of the economy, treasury yield, taxes amount, construction budget, and federal funds rate.

Why Infrastructure Investment Banking?

The global infrastructure market size is valued at over $400 billion, and currently, the supply of attractive projects has fallen short compared to the demand. According to the American Society of Civil Engineers, over the next decade, it is estimated that the U.S. infrastructure requires a $2.39 trillion investment to reverse six decades of under-investment.^[2] Additionally, the proposal of the Biden administration’s ‘American Jobs Plan’ will allow for more public investments.^[5] Currently, the infrastructure sector has extensive funds that are ready to be deployed as investors raised $97 billion in total equity in 2019, however, investment opportunities have been stagnant in North America.^[1] Therefore, the substantial amount of capital combined with the initiative to modernize American infrastructure offers a promising outlook for any future investment banking analyst who is interested in covering the infrastructure asset class.

Top I.B. Infrastructure Deals in 2019 – 2020

According to IJGlobal, an infrastructure journal and project finance magazine, the 2020 Infrastructure and Project Finance League Table Report provides a comprehensive view of the global market. The acquisition of 70% in Saudi Basic Industries Corporation (SABIC), in the Middle East and North Africa region, by the petroleum and natural gas company Saudi Aramco was the largest infrastructure finance deal, having been closed on June 17^th, 2020. In March 2019, Aramco had agreed to pay $32.90 a share for 70% of Saudi Arabia’s sovereign wealth fund (PIF) stake in SABIC, having a total value of $69.1 billion.^[3] The transaction allowed Saudi Arabia’s government to gain a significant amount of cash for the country’s sovereign wealth fund, which was essential to Saudi Arabia’s economic transformation plan to reduce its oil dependency.

Global Top 10 Infrastructure Finance Deals – Full Year 2020

Rank	Transaction Name	Transaction Location	Transaction Sector	Transaction Value ($m)	Financial Close Date
1	Acquisition of 70% in Saudi Basic Industries Corporation	MENA	Oil & Gas	69,064	17/06/2020
2	Area 1 Mozambique LNG	Sub-Saharan Africa	Oil & Gas	22,578	01/10/2020
3	Amur Gas Processing Plant	Europe	Oil & Gas	21,374	03/03/2020
4	General Electric Refinancing	North America	Renewables, Power	15,000	20/04/2020
5	Acquisition of CK Hutchison European Tower Portfolio	Europe	Telecoms	11,770	12/11/2020
6	Dogger Bank A and B Offshore Wind Farms (2.4GW)	Europe	Renewables	10,743	26/11/2020
7	Acquisition of 49% in ADNOC Gas Pipeline Assets	MENA	Oil & Gas	10,140	23/06/2020
8	Saudi Aramco Additional Facility	MENA	Oil & Gas	10,000	07/05/2020
9	Glencore Refinancing	Europe	Mining	9,975	20/05/2020
10	ExxonMobil Bond Facility	North America	Oil & Gas	9,500	15/04/2020

North America Top 5 Deals – Full Year 2020

Key Professional Investment Bankers 

From the rating agency for top executives, Leaders League, the key professional investment bankers for the energy & infrastructure sector are listed below. For 2021, the leading firms covering energy and infrastructure all belong to the top bulge bracket investment banks. Along with bulge bracket investment banks, elite boutique banks such as Evercore, Jefferies, and Centerview Partners trail closely behind. Among bulge bracket and elite boutique investment banks, Tudor, Pickering, Holt & Co., an investment firm that focuses on the global energy industry, maintains its position as a leading firm. 

Infrastructure Investment Banking League Tables

From the IJGlobal report, the two figures below represent the value amount created from financial advisers globally and in North America. Overall, global infra deals value a total of $1.43 trillion for over 3,000 transactions.^[6] While North America infrastructure finance value and deal count figures amount to $450 billion for 932 deals in 2020, which comes in second after Europe.^[6] For financial advisers from the top 20 companies, the value amount created a total of $372 trillion globally and $98 trillion in North America.^[6] 

If you want to take the initiative and equip yourself with market research, industry knowledge, and your due diligence on the promising infrastructure industry, there are some next steps you can take. Once you build this industry knowledge, it is time to bolster that with fundamental and technical skills that you can apply on the job. There is no better option to gain these professional and technical skills than through the programs offered by Romero Mentoring.

Global:

Global:

North America:

Romero Mentoring’s Analyst Prep Program

The Analyst Prep Program teaches the technical and practical skills that investment banks, hedge funds, and private equity & consulting firms look for in a candidate. Students begin with little to no technical skills and develop into fully prepared professionals who can perform as first-year analysts from day one through the program’s training and internship.

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Our Story

Luis Romero, founder of Romero Mentoring, spent five years developing an analyst training program that he wishes he had when he was in college – especially one that gave him access to a complete training and finance internship experience that could advance his career. Since no opportunity like this existed to him at the time, Luis went through a stressful recruiting process like so many others have. He successfully landed a full-time job offer upon graduation and worked as an M&A analyst at Credit Suisse in NYC for two years. He then moved to the buy-side as a junior trader and analyst. After gaining experience there, he created his own fund, Romero Capital, and later become an instructor in financial modeling and valuation. After working with hundreds of professionals and analysts, Luis became committed to creating his own mentoring program because he understood the crucial need for a hands-on, personal experience in the competitive world of finance.

Sources:

1. Goldman Sachs Briefings. “The Evolution of Infrastructure Investing.” Goldman Sachs. 4 Feb. 2020.
2. Monier, Stéphane. “Investing in the US’ infrastructure recovery.” Lombard Odier. 19 April, 2021.
3. Martin, Matthew. “Oil giant Saudi Aramco completes $70 billion takeover of Sabic.” Bloomberg. 17 June, 2020.
4. Leaders League. “Mergers & acquisitions, Sector: energy & infrastructure – large-cap.”
5. Briefing Room. “FACT SHEET: The American Jobs Plan.” The White House Briefings. 31 Mar. 2021.
6. IJGlobal. “IJGlobal League Tables – full-year 2020.” IJGlobal. 02 Feb. 2021