Infrastructure Investment Banking: Definitions, Deals, and a Dizzying Diversity of Verticals

The most difficult part of infrastructure investment banking is defining the exact verticals and deal types it covers.

Like renewable energy IB, different banks classify their groups differently, so you could find yourself working on everything from a data center REIT M&A deal to an airport financing to an IPO for a solar developer.

It even includes elements of healthcare, industrials, and oil & gas investment banking.

In fact, a better question might be: “What is NOT within the scope of infrastructure IB?”

And the answer is… maybe consumer retail, FIG, and most of tech and TMT?

I’ve been staring at different sources for hours, but haven’t come to a firm conclusion about this one.

But I’ll attempt to break down the group and its variations here:

What is Infrastructure Investment Banking?

Infrastructure Investment Banking Definition: In infrastructure investment banking, bankers advise companies in the data center, renewables, transportation, utilities, and energy storage/transportation markets on equity and debt issuances, asset deals, and mergers and acquisitions.

Yes, it’s an even more expansive definition than the one for renewables, and it happens to include renewables as well.

Infrastructure includes select verticals from many other groups, but not entire other groups:

For example, in real estate, data center, cell tower, and fiber infrastructure REITs are considered “infrastructure,” but hotel and retail REITs are not.

That’s because data centers and cell towers provide “essential services,” while hotels and shopping centers do not.

Within renewables, companies that hold and operate solar and wind assets fall into this category, but an EV manufacturer like Tesla or BYD does not.

Yes, electric charging stations are infrastructure, but EV companies’ main business is manufacturing and selling cars, and cars are “consumer discretionary” items.

How Do Banks Classify Their Infrastructure Teams?

There is no consistency at all, probably because of the issues above.

But just for fun, here are a few examples:

• Goldman Sachs: It has a “Public Sector and Infrastructure” group that seems to combine public finance, transportation, higher education (???), and sports (???).
• P. Morgan: It does not seem to have a dedicated group, but it does have an Energy, Power, and Renewables team.
• Lazard: It has a Power, Energy, and Infrastructure team and a separate Telecom & Digital Infrastructure team.
• RBC: It has a Power, Utilities & Infrastructure team.
• Piper Sandler: It has an Energy, Power, and Infrastructure team… which also seems to include the main oil & gas verticals (???).
• Brown Gibbons Lang & Company: It has an “Infrastructure & Environment” team that includes some, but not all, of the verticals above.

You get the idea, so I’ll stop here and move on to the next confusing topic.

Infrastructure Investment Banking vs. Renewables, Power & Utilities, Project Finance, Public Finance, Real Estate, Oil & Gas… and More?

I’ll start this section with the easiest-to-explain differences.

With public finance, there is some overlap because certain assets, such as airports and stadiums, could be considered “infrastructure.”

However, public finance teams advise only governments, non-profits, and tax-exempt entities – not private corporations – and the scope of deals and industries is much narrower.

For example, a public finance team would not advise on an M&A deal between two data center REITs or on the financing for a privately funded offshore wind farm.

The main differences vs. project finance are that infrastructure IB teams tend to work at the corporate level, and they advise/arrange more than just the financing.

An infrastructure IB team might advise a toll road company that owns and operates many different roads, but the project finance team might work on the financing for a single road.

With the industry group comparisons, “infrastructure” normally includes specific verticals within each group:

• Renewables: Companies that “hold” solar and wind assets might be classified as infrastructure, but you probably wouldn’t put EV or battery manufacturers here.
• Real Estate: Data center, fiber, and cell tower REITs and potentially some healthcare REITs (e.g., for nursing homes) might be here, but hotels, home builders, and other REITs would not.
• Industrials: Infrastructure includes railroad, toll road, seaport, and airport companies within industrials, but not airlines, capital goods, or aerospace/defense companies.
• Power & Utilities: It could include regulated utilities and transmission providers, but unregulated companies (independent power producers) could go either way; I could not find a clear consensus here.
• Oil & Gas: Infrastructure potentially includes midstream (storage & transportation) companies, but not upstream, downstream, or service companies.

What Do Analysts and Associates Do?

Because infrastructure covers a huge range of verticals, it’s difficult to pinpoint the exact tasks an IB Analyst or Associate will work on.

However, if we generalize a bit, we can say the following:

• M&A Deals: Corporate-level mergers and acquisitions happen in these sectors, but they are much less common than asset-level deals, such as a utility company acquiring an additional power plant or a toll road operator buying more roads.
• Capital Markets: Companies in most of these verticals use high leverage because they tend to own and operate assets with predictable/stable cash flows that are often locked in by long-term leases or power purchase agreements (PPAs). Therefore, debt deals tend to be more common than equity deals, though you will see IPO, SPAC, and follow-on activity for higher-growth companies when market conditions are good.
• Others: Restructuring and “special situations”-type deals are not especially common because most companies in this space rarely default or go bankrupt. There are some famous counter-examples (e.g., KKR’s buyout of electricity utility TXU), but these typically only happen due to extreme mismanagement or terrible ideas (e.g., KKR betting on “always high” natural gas prices).

Infrastructure Trends and Drivers

You should look at the separate industry group articles for this one, but here’s my summary of the top trends that affect most of the verticals:

1. Energy Demand – This one is a bit of a “circular reference” because certain types of infrastructure, such as data centers, drive energy demand, but energy demand itself also drives demand for other assets, such as solar/wind/nuclear/gas plants, transmission lines, and even oil pipelines.
2. Commodity Prices – This is complex because higher commodity prices hurt certain verticals but help For example, higher oil prices help midstream companies that transport oil via pipelines and vessels, but they also help renewable companies by increasing the cost of fossil fuels. Meanwhile, higher metal prices hurt renewable developers but help transportation companies that ship commodities worldwide.
3. Demographics – A higher population and higher income/education levels in an area tend to increase demand for electricity, gas, water, telecom services, and data.
4. AI and Technological Advances – The massive growth in data and compute required for AI-enabled applications is driving data center demand and the energy required to support all these data centers. That means more renewables, more nuclear, and yes, more fossil fuels because of how they can respond quickly to fluctuating demand.
5. Global Trade – A higher volume of global trade helps transportation and logistics companies, such as airport and seaport operators, and it also tends to help oil & gas pipeline operators in search of new markets. Its effects are less direct in verticals such as data centers and renewables, but if there’s a disruption to trade, such as a tariff apocalypse, these sectors will be hurt because it will become more expensive to build and maintain assets.
6. Inflation, Interest Rates, and Monetary Policy – All infrastructure verticals tend to benefit from loose monetary policy because most assets have relatively high cash flow yields. When interest rates are at 0%, an 8% yield is quite attractive, but when you can earn a 5% yield on U.S. Treasuries, it’s less impressive. So, rising inflation that central banks counter with tighter policy tends to be bad news.
7. Government Policies, Taxes, and Regulation – All these verticals are highly dependent on government policies in the form of subsidies, permitting, tax credits, and even specific numbers like the “Authorized ROE” for regulated utility companies. Sometimes, the policies are implemented at the national level (tax credits, tariffs, etc.), while state and local policies are more relevant for others (e.g., real estate).

Infrastructure Investment Banking Overview by Vertical

And now I’ll attempt to summarize the main verticals without turning this article into War and Peace:

Data Centers & Digital Infrastructure

Representative Public Companies: American Tower, Crown Castle, DigiCo Infrastructure REIT (Australia), Digital Core REIT (Singapore), DigitalBridge, Digital Realty Trust, Equinix, Keppel DC REIT (Singapore), and SBA Communications.

You could arguably add companies like Amazon, Alphabet, and Microsoft to this list, but since they are highly diversified, I’m not sure it’s accurate to call them “infrastructure companies.”

This vertical is a bit like “boring old office real estate mixed with exciting new tech.”

Even though these companies operate data centers, most of their revenue comes from long-term leases, which means factoring in RE-specific concepts such as concessions, expense reimbursements, tenant improvements, and absorption/turnover vacancy.

Some of these companies earn income from “usage fees,” in which case they start to resemble non-real-estate firms, but the bulk of their revenue still tends to come from rent.

All REITs, including data center REITs (everything on the list above), must distribute a high percentage of their Net Income in the form of Dividends to maintain their status and avoid corporate-level taxes.

Because of this distribution requirement, REITs cannot maintain high Cash balances and must issue Debt and Equity regularly.

They also use alternate metrics, such as FFO and AFFO, in place of traditional Net Income due to significant Gains, Losses, and Depreciation (though only U.S.-based REITs record Depreciation).

On the data center developer side, many firms operate more like power producers, focusing on metrics such as the operational Megawatts (MW), GPUs, and the usage by segment (e.g., AI Services vs. Hyperscalers vs. Cloud).

Here’s a good overview from Yotta, a data center developer in India:

Renewable Energy

Representative Public Companies: Canadian Solar, Dongfang Electric Corporation, First Solar, GE Vernova, Iberdrola, Inox Wind, JinkoSolar, Nordex, Northland Power, Ørsted, Siemens Energy, SunPower, SunRun, and Vestas.

I’m focusing on solar and wind here because these verticals are most likely classified as “infrastructure.”

That said, it’s a stretch to include manufacturing companies in these lists because they rarely hold and operate the assets for the long term.

The key drivers here are the CapEx required to build new power plants, their capacities in MW, and the contracts that govern their electricity production, such as the allowed rates, rate increases, and life spans.

“Power Purchase Agreements” (PPAs) lock in rates over long periods, so any plant governed by these contracts is less risky than one with “merchant pricing,” which is based on current market rates for electricity.

Wind assets – especially offshore wind – tend to be bigger, riskier, and more expensive than solar assets, which explains the wide spread in the valuation multiples:

Since renewable assets tend to operate at high margins and cash flow yields once they’re finished, a huge amount of time and effort goes into assessing the upfront development risk in terms of budget and delays.

An 85% EBITDA margin may not translate into an acceptable IRR if the project exceeded its budget by 2x and took an extra year to finish.

Transportation & Logistics

Representative Public Companies: Abu Dhabi Ports Company PJSC, Adani Ports and Special Economic Zone, Aena S.M.E., Aeroports de Paris, International Container Terminal Services, Jiangsu Expressway Company, Motiva Infraestrutura de Mobilidade, Ningbo Zhoushan Port Company, Qingdao Port International, Shandong Hi-speed Company, Shanghai International Port (Group), Transurban Group, and Zhejiang Expressway Co.

Most companies here operate airports, seaports/terminals, or toll roads (e.g., Transurban Group in Australia).

Some also own fleets of containerships, dry bulk ships, or tanker/gas carriers (though this gets into energy transportation territory – see below).

For companies that own ports or roads, the key drivers are the traffic (e.g., cars, planes, or ships), the passengers or freight per vehicle, and the fees per passenger or freight unit:

Often, traffic trends with GDP growth or import/export volumes, while fees rise with inflation, overall demand, and any regulatory limits.

Some ports and roads may have “contracts” in place for large customers, but there is no exact equivalent for the PPA from the energy sector because demand is harder to predict.

So, much of the downside risk here comes down to assessing the chances of a global recession and its impact on volumes and pricing.

All types of ports and roads must spend something on Maintenance CapEx to keep operating; Growth CapEx factors in if they want to add terminals or the capacity for higher volumes.

This makes these assets a bit “lumpy” in financial models because the total capacity can stay the same for years but suddenly jump up when an expansion is completed.

For companies that own fleets, you spend a lot of time reviewing their fleet composition, including the utilization rates, contracted daily rates, ages, and vessel capacities:

Utilities & Essential Infrastructure

Representative Public Companies: AltaGas, American Water Works, Beijing Enterprises Water Group, Duke Energy, Electricité de France, EnBW Energie Baden-Württemberg, Endesa, Enel, ENN Natural, Exelon, Fortum, Iberdrola, Korea Electric Power Corporation, Korea Gas, Naturgy Energy, NRG Energy, Rubis, Sabesp, Southwest Gas Holdings, Tokyo Electric Power Company, and Tokyo Gas.

This vertical includes utility companies for electricity, gas, and water, as well as diversified multi-utilities and sometimes even healthcare facility owners.

Since they are deemed “essential services,” governments regulate them strictly by setting an “allowed” or “authorized” Return on Equity and capital structure. Based on that, the company then backs into the allowed rates it can charge.

Key metrics include the Rate Base, which represents Net PP&E with a few adjustments, the Debt / Total Capital Ratio, and the company’s Operating Expenses, Depreciation, and Interest Expense, as these all factor into the rate calculations:

To grow, regulated utility companies must develop or acquire more plants or transmission/distribution infrastructure, cut expenses, or ask regulators to allow a different ROE or capital structure.

This explains why there are so many asset-level deals in this vertical: It’s very difficult to win approval for huge corporate-level mergers, especially across different regions, so most companies go for smaller tuck-in deals to expand.

Independent power producers are in a different category because they’re not governed by the same regulations, which means greater upside and downside potential.

Energy Transportation & Storage (Midstream)

Representative Public Companies: Cheniere Energy, Enbridge, Energy Transfer LP, Enterprise Products Partners LP, Global Partners LP, Kinder Morgan, ONEOK, Pembina Pipeline, Petronet LNG, Plains All American Pipeline LP, Targa Resources, Transneft, and Ultrapar Participações.

Not everyone considers Midstream companies in oil & gas to be “infrastructure,” but I think it is appropriate since oil and gas are essential for modern life and will continue to be for many decades.

This vertical is probably most like REITs because both companies tend to be governed by long-term contracts that determine volumes and fees over time, and many companies in both sectors are exempt from corporate-level taxes.

Also, since both company types tend to distribute high percentages of their cash flow in the form of Dividends, they need to raise Debt and Equity constantly.

The difference in Midstream, at least in the U.S., is that the Master Limited Partnership (MLP) structure adds complexity by separating shareholders into General Partners (GPs) and Limited Partners (LPs) and sometimes granting them different distributions based on incentive tiers.

However, MLPs have become less popular since the 2017 tax reform, and many Midstream companies have converted to C-Corporations and now pay corporate taxes.

Outside the U.S., this traditional structure with corporate-level taxes is also more common, as there are fewer options for pass-through entities.

Regardless of the structure, the key drivers are the same: Pipeline or Storage Capacity, the Utilization Rate, the Throughput, and the Fees per Unit Transported or Stored:

Infrastructure Accounting, Valuation, and Financial Modeling

I cannot possibly list every single metric here, so I’ll approach this by explaining the high-level differences that apply to everything within infrastructure:

1) Focus on Cash Flow and Yield Metrics and Multiples – Since many infrastructure assets and companies are closer to fixed-income investments, investors focus heavily on metrics such as Cash Flow Available for Debt Service (renewables and transportation), Funds from Operations (REITs), and Distributable Cash Flow (midstream).

These metrics are not the same!

Yes, they’re all based on “cash flow,” but each one treats key items such as Interest Expense and CapEx differently:

• CFADS: Does not deduct Interest Expense but does factor in the tax shield; only deducts Maintenance CapEx.
• FFO: Deducts the full Interest Expense but does not deduct any CapEx.
• DCF: Deducts the full Interest Expense and deducts only Maintenance CapEx.

They also serve different purposes; CFADS is used for debt sizing and sculpting, while FFO and DCF are more useful for determining Dividends in the period.

However, they all relate to an asset’s ability to pay or repay its investors.

2) Alternate Metrics and Multiples – For example, power assets are often valued based on $ / MW multiples, and utilities firms might be valued based on Enterprise Value / Rate Base multiples.

Some of these are non-financial and relate to the company’s overall “capacity,” while others are financial (e.g., Distributable Cash Flow for Midstream companies).

3) Sum-of-the-Parts Valuation and the NAV Model – In some verticals, such as renewables, real estate, and transportation, you often take a “portfolio approach” and assign a specific value to each item on a company’s Balance Sheet to determine what it’s worth.

This is called the “Net Asset Value” (NAV) Model, and, unfortunately, it works differently in each vertical.

Yes, finance is designed to confuse you by using the same names for different analyses and models.

You can see an example from Lazard for the CMB / Euronav deal here:

Outside of transportation, this often turns into more of a Sum-of-the-Parts Valuation, where you value each segment with multiples and a DCF, aggregate their values, and deduct corporate overhead to estimate the company’s value.

Example Valuations, Pitch Books, Fairness Opinions, and Investor Presentations

I will “cheat” a bit in this part and re-use some of the valuations, pitch books, presentations, and Fairness Opinions from previous industry group articles.

It takes a long time to find these examples, especially for non-U.S. deals, and it wasn’t possible to refresh the entire set within my time constraints.

The Digital Infrastructure, Transportation, and Energy Transportation & Storage sections have most of the newer / different examples:

Data Centers & Digital Infrastructure

KKR and Global Infrastructure Partners / CyrusOne – Leveraged Buyout (MS, DH Capital, Barclays, Citi, GS, JPM, and WF)

• Fairness Opinion

DigitalBridge and IFM Global Infrastructure Fund / Switch – Acquisition (RBC, TD, GS, and MS)

• Fairness Opinion

Blackstone / QTS Realty – Leveraged Buyout (Barclays, Citi, DB, GS, JPM, MS, and Jefferies)

• Fairness Opinion

Cartica / Yotta – SPAC / IPO in India (Bitooda and Gruppo)

• Investor Presentation

ChinData – U.S. IPO for a Chinese data center company (MS, Citi, UBS, and China Renaissance)

• IPO Prospectus

Renewable Energy

CBRE and Blackstone / Altus Power – SPAC / IPO (Citi, JPM, MS, and Duff & Phelps)

• IPO Investor Presentation
• Fairness Opinion (pg. 132)
• Fairness Opinion from Later Buyout by TPG

Iberdrola / Avangrid – Acquisition (Moelis and MS)

• Discussion Materials and Valuation Presentation – Moelis
• Going-Private Transaction – Investor Presentation

BP / Archaea Energy – Acquisition (MS and BofA)

• Investor Presentation
• Fairness Opinion

Transportation & Logistics

Abu Dhabi Investment Authority Consortium / Malaysia Airport Holdings Berhad – Privatization / Buyout (AmInvestment Bank Berhad, Hong Leong Investment Bank Berhad, and UBS)

• Investor Presentation from ~1 Year Before the Deal
• Equity Research on the Deal: CGS | Kenanga | RHB

Fairfax Financial / Atlas Corp – Acquisition (MS and Citi)

• Investor Presentation
• Fairness Opinion

DP World Australia / Silk Logistics – Acquisition (Barrenjoey and Kroll)

• Investor Presentation
• “Scheme Booklet” with Fairness Opinion / Valuation starting on page 132

MSC Mediterranean Shipping Company / Wilson Sons – Acquisition (BTG Pactual and Peel Hunt)

• Summary Investor Presentation
• Detailed Presentation (English version starting on page 73)
• Article About Deal (in Portuguese, but you can easily get a rough translation)

Utilities & Essential Infrastructure

Tennessee Valley Authority (TVA) – Potential Privatization or Spinoff (Lazard)

• Strategic Assessment Presentation – Incredibly detailed presentation
• Article with Background Information

Brookfield and Other Investors / AusNet – Buyout (Adara Partners, Citi, and BofA)

• APA Group’s Presentation on its Superior Bid for AusNet
• Case Study from Adara Partners on the Deal Timeline
• Brookfield Presentation (Note on pg. 13)

Avangrid / PNM Resources – Merger (BNP, MS, and Evercore)

• Investor Presentation
• Evercore – Fairness Opinion

Energy Transportation & Storage

CMB / Euronav – Minority Stake Acquisition (Lazard and DNB Markets)

• Deal Analysis and Valuation Presentation

Equitrans Midstream / EQM Midstream Partners – MLP “Buy-In” Deal (Evercore, Guggenheim, and Citi)

• Deal Presentation
• Guggenheim and GS – Preliminary Analysis and Presentation
• Fairness Opinions – Guggenheim | Evercore

Sunoco / NuStar – Acquisition (Barclays and Truist)

• Deal Presentation
• Fairness Opinion

Phillips 66 / DCP Midstream – Acquisition (Citi and BofA)

• Deal Presentation
• Fairness Opinion

The Top Infrastructure Investment Banking Groups and Firms

There are no true infrastructure “league tables” because of all the classification issues and inconsistencies.

But it is safe to say that most of the bulge bracket banks perform well and do a lot of deals in these verticals; you’ll see GS, JPM, MS, Citi, Barclays, and BofA on many large deals.

UBS and DB appear to be less frequent advisers but advise on lower deal volumes in general.

Among the elite boutiques, Evercore, Lazard, Rothschild, and Guggenheim advise on many deals..

Moving down a level, firms like Jefferies and RBC are also quite active in many infrastructure verticals.

Also in this middle-market tier, Solomon Partners appears to be quite active in the space.

There’s some controversy around Macquarie, as it is best known for infrastructure investment but less for advisory. So… it’s fine, but not quite the same tier as the other banks (???).

Groups like Nomura Greentech also operate in the space, and if you go to the Project Finance side, you’ll see the usual suspects: many French and Japanese banks.

In terms of boutique firms, just combine the lists in the other industry group articles: Marathon, CohnReznick, Onpeak, Green Giraffe, Global Power Partners, Whitehall & Company, PEI Global Partners, Ocean Park, AMA Capital Partners, Eurofin Group, and Seabury Group are all examples.

Exit Opportunities

Exit opportunities from infrastructure tend to be quite broad because you could potentially work on a huge range of deal types across many industries.

Yes, you have an advantage if you aim for infrastructure private equity funds or project finance roles, but you would also be competitive for corporate development and related roles at normal companies.

And you could easily move around to other banks, even switching between areas like investment banking, corporate banking, and capital markets.

You will probably not be the strongest candidate for venture capital or growth equity roles, but most other opportunities should be fine.

How to Learn More

For most of these verticals, I recommend reviewing the additional resources in the existing industry-specific articles (oil & gas, power & utilities, and renewables).

For digital infrastructure and data centers, check out Data Center Dynamics, Data Centre Magazine, and JLL’s Data Center Outlook. Houlihan Lokey also publishes useful market updates.

For transportation and logistics, Airport World, Railway Age, Toll Roads News, and Marine Money are all good sources.

In terms of our financial modeling courses, the most obvious fit is the Project Finance & Infrastructure Modeling course.

It focuses on asset-level deals with one corporate example for an airport leveraged buyout.

Other than that, there’s a data center REIT M&A example in the REIT Modeling course, and there’s a waste service LBO example based on Viridor in the U.K. that is “sort of infrastructure” in the Private Equity Modeling course.

There are also various transportation/logistics examples throughout the other courses (e.g., a financing case study for Central Japan Railway in the Interview Guide).

Should You Make Inroads into Infrastructure Investment Banking?

As covered in all the related articles on this site, I think the long-term trends for infrastructure are quite positive.

Many assets in “developed” countries must be replaced or upgraded, emerging markets must spend as they advance, and the AI bubble “mega-trend” will drive more data center construction and energy demand.

You’ll develop a broad skill set working in one of these groups, and you will have plenty of exit options.

That said, there are some downsides.

For example, the renewables vertical is notoriously over-banked and quite cyclical, as it depends heavily on government policies and macro trends.

Also, despite the broad industries, you may get pigeonholed into one specific vertical or deal type, and it can get quite boring to work on tuck-in power plant or pipeline acquisitions repeatedly (for example).

So, if your goal is to be a true generalist, I would still rank infrastructure below groups like consumer retail, technology, and healthcare.

But if you want something a bit more specialized, and you ever figure out how to explain exactly what “infrastructure” means, it might be perfect.