Public funding and essential services drive resilient infrastructure M&A

M&A activity in the UK’s infrastructure services sector has demonstrated resilience over the past five years, with dealmaking driven by public funding commitments and the essential nature of the services provided by companies across the industry.

New research from Heligan Group has found that in the five-years ending December 31 2024, annual deal volumes in the infrastructure services sector increased from 183 in 2020 to 266 in 2024. According to Heligan Group's latest Five-Year Review: UK Infrastructure Services M&A report, the sector has consistently recorded in excess of 250 transactions each year since 2021.

Heligan Group’s Head of Infrastructure Services Andrew Dickinson said that the sector’s recovery from COVID-19-related disruption has been rapid, with a 50 per cent increase in activity during 2021 alone as capital flowed back into the sector and pipelines reopened.

"This level of sustained activity shows just how resilient the UK infrastructure ecosystem has become,” Dickinson said. “Long-term public funding commitments, combined with the essential nature of the services delivered by these businesses, created a dependable platform for both trade buyers and financial sponsors to pursue growth even during periods of economic instability."

According to the report, diversified groups have been the standout performers over the five-year period, with Dickinson saying investors have identified the strategic logic that these companies operate with and how they are well-placed to “deliver stable, repeatable revenues and are well aligned with the UK's long-term infrastructure challenges.”

Heligan Group found that transaction activity involving diversified groups doubled over the five-year period, with buyer appetite focusing on scalable multi-service platforms. The report also stated that these businesses are more likely to command higher-valuations and attract greater inbound investment.

Andrew Dickinson said that investor confidence has been further strengthened by wider government policy, particularly a £113 billion capital injection last year that “marked the most ambitious infrastructure commitment in more than a decade and has already begun reshaping expectations for future workloads.”

Dickinson identifies regulatory factors such as environmental and wastewater reforms and tightening building safety legislation as key drivers of demand for infrastructure services, subsequently encouraging M&A activity.

Private equity investment in areas such as MEP-driven engineering and contracting, specialist testing and certification platforms and environmental services is also cited as a significant factor in the sector’s M&A market.

Dickinson says that Heligan Group believes 2024’s shift to a Labour government and the £113 billion investment package will come to be seen as “a major turning point for the sector”, adding that “the intensifying focus on decarbonisation, digital transformation and regional regeneration” will also serve to strengthen buyer confidence.

Despite 2025 beginning slowly, Dickinson says, Heligan Group expects the sector to see elevated dealmaking levels through to 2030, “supported by record AMP8 investment, accelerating energy transition programmes and ongoing digital infrastructure demands.”

The strategic drivers behind the infrastructure services M&A market are structural, rather than temporary, according to Dickinson, who adds that “the UK is entering a decade of transformative investment” in areas such as renewable energy, data infrastructure and water networks.

He concludes that this “provides exceptional opportunities for well-positioned service providers and the investors backing them."

Discover how increased infrastructure spending is helping to generate M&A activity in the UK's civil engineering sector

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