The first half of 2025 has been mixed for UK infrastructure M&A. While macroeconomic headwinds and political shifts have cooled overall deal activity, there are bright spots – particularly in the renewables space that continue to attract investor interest.
H1 2025 sector highlights
- Renewables remains the most active sector, accounting for 36% of total deal volume, although a 28% decline in deal activity year-on-year (YoY) is expected. Rising costs, tax pressures and delays in planning and grid connection have reduced investor appetite.
- Power remains steady and accounts for 16% of overall deal volume. Growth in this sub-sector is largely being driven by huge power demands resulting from the increased adoption of AI, rising data centre capacity and wider macroeconomic tailwinds.
- Transport transaction volumes are resilient and have maintained momentum from previous years, supported by green transport initiatives.
- Telecoms has seen a steady flow of fibre deals, but overall investment value has dipped. Subsea cable projects are gaining traction, while 5G investment has slowed.
Despite a 65% drop in renewable transactions compared to H1 2024, the sector remains a key focus. Power has seen the next most dramatic downturn, recording a near 50% fall in deal volumes compared to H1 2024, with telecoms showing the most stability in deal volumes YoY.
UK infrastructure debt market
Infrastructure debt markets are also facing uncertainty. Credit spreads widened in early 2025, and while infrastructure debt tends to adjust more slowly, the long-term impact is still unfolding. The UK remains a strong contributor to European infrastructure debt volumes, including the Inch Cape offshore wind financing which raised over £3.5bn from a 22-bank syndicate during the period.
Investors are optimistic that changes to the UK’s debt measurement rules could unlock billions for infrastructure. Amid tighter fiscal policy, private financing has gained momentum, supported by the government’s push for growth and grid decarbonisation. Overall, the UK is expected to remain an attractive market within Europe for debt investors, offering a broad range of deal sizes and return profiles.
Growing demand in infrastructure supporting services
While headline M&A volumes have softened, infrastructure support services have remained a strong performer in 2025, driven by net zero goals and mounting operational pressures facing major utilities.
As government investment grows in housing, water and renewable energy, demand is surging for specialised providers – from EV charger installers to wastewater firms. This has fuelled consolidation, with private equity leading the charge. These investors are targeting asset-light, high-margin businesses that offer scalable solutions across multiple infrastructure sub sectors. This trend is reinforced by a clear divergence in investor appetite, while asset-heavy deals have slowed, service-oriented businesses are attracting strong interest.
UK Infrastructure M&A short-term outlook
While overall M&A activity has tempered, the UK infrastructure market continues to offer strategic opportunities – particularly within the energy transition and digital connectivity spaces. As fiscal and regulatory clarity improves, we expect confidence to return, especially in sectors with long-term growth potential.
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