UK Law and Practice Contributed by: Federico Fruhbeck, Alice Brogi, Alex Bluett and Gisele Zouein, Gibson, Dunn & Crutcher LLP
Gibson, Dunn & Crutcher LLP Telephone House
2–4 Temple Avenue London EC4Y 0HB United Kingdom Tel: +44 20 7071 4000 Email: inquiries@gibsondunn.com Web: www.gibsondunn.com
1. Market Trends 1.1 Energy and Infrastructure M&A Market Over the past 12 months, the UK energy and infra- structure M&A sector has remained resilient but increasingly selective. Activity improved through late 2024 and into 2025 as financing markets stabilised, and sellers adjusted price expectations. Overall vol- umes were slightly softer than a year ago, with a tilt toward platform build‑outs and more disciplined pric- ing. Inflation has eased from its peak, but the cost of debt remains elevated versus pre‑2022 levels. This continues to push buyers to favour-contracted, infla- tion‑linked cash flows and to sharpen their focus on downside protection, counterparty quality, and mer- chant‑price exposure. Geopolitical tensions (in Ukraine and Gaza, and broad- er trade frictions) have reinforced the premium on energy security, supply-chain resilience and domestic infrastructure sovereignty. That has supported inter- est in grid, storage and digital infrastructure (including data centres and fibre), with AI‑driven demand materi- ally accelerating deal flow in data centres, fibre optics, and adjacent digital‑infrastructure subsectors; while some large offshore wind and new‑build renewable processes progressed more cautiously amid sup- ply‑chain and planning/grid‑connection constraints. With respect to how the UK compares to the global pace – the UK remains a highly attractive jurisdiction but deal volumes have been modestly weaker than some major global markets. That said, the UK broadly
aligns with global structural themes – decarbonisa- tion, electrification, digital demand, grid/resilience – so while the pace in certain segments may lag, inves- tor appetite remains strong, and the UK continues to feature as a strategic destination for energy and infrastructure M&A. In short, the market is less about rapid boom growth and more about quality, holding discipline and plat- form building. Challenges remain (inflation, cost of capital, geopolitical and supply-chain risk, planning/ grid bottlenecks), but the strategic imperative behind the sector (transition to net zero, energy security, digi- tal infrastructure) means that the UK continues to pre- sent considerable opportunities for buyers and sellers. 1.2 Energy and Infrastructure Trends Over the past year, UK energy and infrastructure have been shaped by regulatory change, ESG expecta- tions, and macroeconomic headwinds. Policy contin- ues to prioritise energy transition, with momentum in grid reinforcements, and energy storage. However, the reality on the ground has been more complex, as policy developments have both accel- erated ambition and complicated delivery. The expanded Contracts for Difference regime, support- ing investment in low-carbon electricity generation, and the creation of Great British Energy – backed by GBP8 billion to act as a strategic investor and help accelerate the UK’s clean-energy transition – signal an increased state role in catalysing capital into pri- ority technologies and regions. Meanwhile, inflation, higher financing costs, supply‑chain volatility, and geopolitical risk have slowed or reprioritised projects,
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