Deals may have been parked in recent weeks as investors held back in response to the volatile news cycle, but transportation M&A is rolling on without any roadblocks. The sector is one of the few that has barely skipped a beat, even during the pandemic.

Annual total value of deals in the sector rose from 2019 through 2021. People may have temporarily stopped traveling due to the pandemic, but goods still had to get from A to B. Factor in the roads and other infrastructure required to support transportation and it’s clear investors are tuning out the noise and taking a long-term view.

Value this year is on pace with recent highs—Q1 2022 recorded over €10 billion in investment across 81 deals in EMEA, according to Dealogic. The largest of these saw US private equity (PE) house KKR pay €1.7 billion for Accell Group, Europe’s largest manufacturer of e-bikes and its second largest producer of parts and accessories.

Electrifying deals 

The deal holds a clue to one of the underlying drivers accelerating these developments. Last month, UK bus operator Stagecoach received an offer from German sponsor DWS Group, its fifth approach in five months.

DWS has noted that the UK government’s aim to reduce carbon emissions bodes well for bus transport, potentially with public-sector capital flowing into the space to expand these industries in a bid to reduce car travel.

Other governments around Europe have the same idea, meaning many transportation sector deals will appeal to the ongoing decarbonisation narrative. A further boost may come from the Next Generation EU fund, which is deploying public largesse to rev up the roll out of public transport, among other things.

Chain reactions

Another vote in favour of continued transportation deal activity is the emphasis on supply chains, which were rocked by COVID-19 and the subsequent snapback in economic demand and have since come under renewed strain.

Russia’s invasion of Ukraine has created additional disruptions, as has China’s decision to lock down Shanghai amid the biggest surge in COVID-19 cases the country has seen since the pandemic began. Shanghai is China’s busiest port and usually handles about 20% of all exports, with cargo moving at limited capacity.

Goods and people ultimately need to continue being transported, and capital is required to develop the assets that can make that happen. Deals currently on the radar include the Hellenic Republic Asset Development Fund’s sale of a majority stake in the Heraklion Port Authority, and the sale of infrastructure group Atlantia, which earlier this month received a €12.7 billion joint bid from Blackstone and the Benetton family’s holding company, Edizione, having just spurned an offer from peer ACS and PE funds Global Infrastructure Partners and Brookfield.

Judging by the impressive run at the start of 2022, investors will continue upon the road most travelled.