Flurry in car park deals could end in crash as debt and tech pose threats

 
Lucy White
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A recent flurry of car park deals has prompted market intelligence firm S&P Global to warn investors that the assets may not be such an easy ride.

S&P noted that increased interest from infrastructure and private equity funds, combined with the decline of green-field opportunities in the infrastructure market and the attractiveness of some car park operators’ credit characteristics, had driven mergers and acquisitions.

Read more: Rail lines and car parks: How 325,000 homes could be built on London's public land

But private equity-style deals often involve bringing in debt to fund the high acquisition prices, which “exposes companies to future refinancing risk” according to S&P.

It also added that technology developments, such as ride-hailing apps and autonomous cars, could reduce the need for car parks and limit their profitability. Economic growth, meanwhile, has been shown to correlate with car park operators’ performance, making them vulnerable to downturns.

Read more: Uber's creating car parks for waiting drivers at Gatwick and City airports

S&P said that investors would have to be careful that business models of the car parks could adapt to these changes. Companies which own the car parks rather than leasing could be less susceptible to risk.

In just a few of the past year’s deals, Spanish operator Empark Aparcamientos Y Servicios has been acquired by Macquarie, Japanese car park operator Park24 grabbed the UK’s National Car Parks, and KKR bought Q-Park.

Read more: KKR drives off with Q-Park after £2.6bn offer puts the firm in exclusive talks

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