UK struggling to entice developers

Exclusive: Risk profile, a lack of a clear pipeline and reduced appetite for new investments are all leading to a reluctance among bidders to consider UK projects, sources have warned.

The UK could face a struggle to entice investors and developers into the infrastructure market, despite government plans to ramp up investment in new projects.

Sources across the industry have indicated that there is a lack of desire to invest in new projects at present, not least because many do not feel the need to go looking for new projects that do not fit with their existing portfolios.

“We are not required to make new investments and we are happy with what we have at the moment,” said Chris Morgan, investment director at Amber, during a recent call regarding the firm’s results.

He pointed to the digital and broadband sector as an example, where projects in the UK tend to require the private sector to take demand risk, whereas Amber’s portfolio has largely concentrated on availability-based contracts. 

“That level of demand risk means we don’t see ourselves taking a lot of new investments in the UK. In Europe we see more of a concession approach so that may be an area that we could look into.”

One developer added that the level of risk transfer still needs to be considered by the UK. “The government is struggling to get UK contractors interested,” he said. “We want to have a dialogue about the appropriate level of risk transfer.”

Meanwhile, the lack of a clear pipeline from government has also resulted in some preferring to focus on other markets when looking for new investment opportunities. “Unless it is a live opportunity, we have enough with our current investment portfolio to keep us busy,” explained one investor.

Sources suggest that while the government is aware that the market is not as buoyant for contractors as it used to be, it needs to be doing more to make sure it can still attract them.