Infrastructure and energy assets remain top of mind for buyers and sellers at the outset of 2025, with a compelling narrative unfolding in the Canadian market. The growing demand for infrastructure and energy projects to meet rising energy needs is pointing to continued M&A opportunities within this space, but the landscape is far from straightforward. Let’s delve into the data and trends that are shaping the deal environment for the remainder of the year.
M&A activity in the Canadian infrastructure and energy projects space remains robust, with 39 deals inked in 2024, reflecting consistent activity levels with high transaction values. This trend is expected to continue in 2025, with nine deals completed in the first two months of the year. If this pace continues, 2025 is projected to see approximately 54 transactions and $22B in deal value. While the deal value might be slightly below 2024 levels, the total number of deals in 2025 is expected to be higher than the previous year.
However, this generally positive outlook is tempered by political headwinds. U.S. tariffs on Canadian energy and other goods, along with Canada’s proposed retaliatory tariffs, are clouding deal forecasting for 2025. Defensive acquisitions will likely increase as dealmakers seek to shield themselves from a potential market downturn in response to the tariffs. Furthermore, recent investment policies from both countries—an “America First” investment policy from the U.S. and a stricter foreign investment review policy from Canada—present additional variables that could further impact transactions this year. As these developments continue to unfold, dealmakers will need to cope with a higher level of uncertainty in their market dealings.
One of the most striking features of the current landscape is the prevalence of megadeals. 2024 saw a higher-than-usual proportion of large transactions, with over 40% of deals valued at over $1B. This trend towards megadeals is likely to continue throughout 2025, as illustrated by CDPQ’s $10B deal to buy Innergex Renewable Energy Inc. (Innergex), which was announced in February. These megadeals are significantly influencing the deal value, even though they are small in volume.
Renewables remain a focal point, continuing to lead the infrastructure M&A space in Canada. Although there was a slight decline from 41% in 2023 to 31% in 2024, renewable deals still accounted for a significant portion of all deals in this space. Canada’s continued efforts toward electrification are sustaining tailwinds for this sector despite pushback on renewable energy from south of the border. In addition to Innergex, two other renewable deals have been announced at the start of 2025: Sitka Power Inc.’s acquisition of a portfolio of operating renewable electricity generation and battery energy storage assets from Saturn Power Inc., and Connor, Clark & Lunn Infrastructure’s acquisition of a significant interest in the 180 MW Armow Wind and 149 MW Grand Renewable Wind projects in southern Ontario from Pattern Energy Group LP.
Data centres are another hotspot for dealmakers. The growth of data centre projects is expected to increase steadily over the coming years, driven by federal and provincial initiatives to attract investment in Canada’s digital infrastructure, particularly by Canadian pension funds. Notable investment activity in this space includes Equinix’s $15B joint venture with GIC and Canada Pension Plan Investment Board for xScale data centre portfolio development, and Pembina Pipeline Corp.’s investment in a large natural gas power plant that could supply a massive data centre complex.
The transportation sector has also seen a 28% increase in activity, covering rail, ports, roads, and other subsector areas. Several large deals in 2024 demonstrated continued interest in these assets, including Cando’s acquisition of the Enterprise terminal and the Mobil Grain Ltd. sale to GCM Grosvenor.
Transmission and distribution assets are expected to see continued interest in 2025 as demand for electricity continues to grow. Canada and its provincial governments are looking to encourage investment in its transmission and distribution infrastructure. Notable transactions in this space include Ontario’s Hydro One completing the acquisition of an approximately 48% interest in the East-West Tie Limited Partnership, and Axium Infrastructure’s acquisition of an 80% equity interest in PUC Transmission LP.
