Inside Infrastructure: Scrutinising Stake Sales

The prevalence of fragmented ownership in infrastructure - an inevitable consequence of the operator-investor relationships in energy infrastructure, and in the last decade, of private capital inflows - is creating a more complex exit landscape. While the joint venture parties may have originally planned for a 100% sale, persistent valuation gaps in recent years mean co-investors often disagree on price, prompting investors to launch stake sales solo. Sponsors are also increasingly using partial exits to recycle capital, rebalance portfolios, and manage risk.

These trends are borne out in the data. According to research from Bain & Company, minority stake sales by GPs accounted for 24% of their exit total in 2024, and the number of partial exits by strategics and investors across all sectors exceeded the five-year average in 2025. Recent examples of this in the infrastructure sector include Ontario Teachers’ Pension Plan Board, where partner Richard Johnson advised on the sales of its long-held stakes in all five of its European airport assets last year, and the recent restructuring of Kelda / Yorkshire Water’s shareholder base, where partners Richard Thexton and Jessamy Gallagher advised at a shareholder level in the context of EQT’s acquisition of other stakes from DWS and Gateway.  

Selling a stake in an infrastructure joint venture is rarely straightforward. The contractual architecture means even a “simple” sale can quickly become complex. Getting this right requires early planning and a clear understanding of how the existing JV framework interacts with the transaction you want to run.

Drawing on our experience advising on infrastructure stake sales globally, here are the five key questions you should consider before launching a stake sale to avoid pitfalls later in the process.

1. The first hurdle: what do your governance and financing agreements allow you to do?

Your shareholders’ agreement, and any other governance documents such as side letters negotiated with your co-shareholders, set the perimeter for any sale process. The first step is fully understanding this contractual framework, which is likely to determine:

• transaction timetable, including the launch window, sequencing of key steps, and longstop dates;
• the scope of the potential bidder universe;
• the specific entity in the holding structure whose shares can be sold;
• the stake size;
• your floor price or maximum price, and other sale terms; and
• what information you can disclose and when (see question 5).

Many sellers underestimate how prescriptive shareholders’ agreements, often negotiated years earlier in different market conditions, can be. Questions 2 to 5 delve into the most critical aspects of this framework, and cover the practical implications for your sales process.

Financing agreements merit equally close attention, particularly as infrastructure assets typically sit within multi-layered capital structures. Each level can carry restrictions that affect a stake sale:

• HoldCo debt may require prepayment or lender consent on a disposal; and
• JV-level and OpCo-level junior debt typically include change of control protections, and JV-level junior debt may have security over the JV shares, requiring release before any transfer.

Proactively identifying these constraints early helps sellers determine an achievable disposal structure and identify necessary approvals.

2. How do the identities of your proposed buyers impact your sales process?

A typical shareholders’ agreement contains detailed transfer provisions, usually subject to a carve-out for transfers to affiliates. In recent years, the question of what constitutes an affiliate transfer for financial sponsors is often hotly debated. Some investors view a transfer by a sponsor to a continuation vehicle or separately managed fund as an effective “exit” which should be subject to standard third-party transfer restrictions. If you are considering such a transfer, a detailed analysis of the shareholders’ agreement is required to determine whether you must comply with the third-party transfer restrictions (including pre-emption rights, which are covered in detail below) before effecting the sale.

Governance and financing documents may also shape the buyer pool by restricting the types of parties who may acquire a stake in the JV. In some cases, this can take the form of a:

• “Whitelist”: A prescribed list of permissible buyers by category (e.g., established infrastructure investors with a minimum AUM); or
• “Blacklist”: A list of prohibited buyer categories (e.g., competitors or distressed investors).

Understanding these restrictions upfront is key, as they inform your bidder outreach strategy and help avoid late-stage complications.

3. How will your co-shareholders’ pre-emption rights affect value and execution risk?

Market practice has shifted in the last 10-15 years towards complex and prescriptive pre-emption rights in shareholders’ agreement. These can materially affect price certainty, bidder appetite and the overall deal timeline:

• Rights of First Offer (ROFOs): Your co-shareholders make the first offer. Without pre-marketing rights, evaluating the offer's merits is challenging, forcing you to either accept it or seek a higher price from third parties without a market benchmark.
• Rights of First Refusal (ROFRs): You must first offer the stake to co-shareholders on specified terms. If they decline, you may approach third party buyers - but usually not on more favourable terms. Crafting the ROFR notice is a balancing act: the terms must be palatable to co-shareholders but also achievable with a third party. If you set the bar too high and fail to find a third-party buyer on those terms, provisions often prohibit a new ROFR notice for 6–12 months, materially delaying your exit. ROFRs have historically been the more common pre-emption right, but ROFOs have been gaining popularity in recently agreed infrastructure JVs - clearing a ROFO hurdle can sometimes offer a cleaner and more certain starting point for an exit.
• Rights of Last Look (ROLLs): Co-shareholders can match a third-party offer at the end of the process. This right can chill bidder appetite, as potential buyers are reluctant to invest time and resources only to be outbid by an incumbent. Bidders may demand break fees or costs underwrites to mitigate this risk.

It is common for pre-emption provisions to require all-cash bids, prohibit deferred or contingent consideration, or prohibit indemnities, as anti-gaming measures. These requirements constrain the commercial package a seller can offer, limiting deal structure flexibility and possibly the pool of interested buyers.

If the pre-emption mechanics do not align with the process you want to run, you may need to renegotiate them or rethink your preferred transaction structure.

4. How will your stake size impact bidder appetite and conditionality?

Where co-shareholders have tag-along rights, these are typically required to be exercised prior to the launch of the sales process to give the selling shareholder certainty as to the total size of the stake being sold. Where co-shareholders can exercise this right later in the sales process, the selling shareholder is required to plan and run a sales process which contemplates a range of stake sizes. Sellers sometimes voluntarily choose to market a range of stake sizes (for example 20–40%) to maximise value or broaden the buyer pool. 

This can prove challenging:

• Financing: Change of control triggers in financing arrangements may only be implicated at the higher end of the range;
• Regulatory: Analysis for merger control, foreign investment, sector specific approvals and operational licences can vary significantly with stake size, impacting conditionality, timelines, and buyer eligibility;
• Governance: If key veto or board appointment rights are available only at specific ownership thresholds (e.g., 45%), bidders may have no interest in acquiring a stake just below that level (e.g., 40%); and
• Bidder Capacity: Certain bidders may lack the financing for a stake at the upper end of the range.

Analysing these factors pre-launch helps identify an optimal stake size or may reveal that a sale to an existing shareholder is the most efficient path, potentially bypassing many of these hurdles.

5. How will information-sharing and management access provisions influence your pre-marketing and diligence processes?

Before instructing advisers to commence work on the information memorandum or diligence scopes, take time to assess what information you are entitled provide to bidders, and when. Many JV frameworks tightly control information flow to potential buyers, especially sensitive data, so it is important to analyse the following:

• Whether a phased information release is required, often distinguishing between a pre-marketing period and post-pre-emption phases;
• Whether commercially sensitive data must be withheld until late in the process or redacted;
• Whether there is a consultation procedure to identify sensitive information and how this interacts with director conflict provisions; and
• Whether NDAs with bidders must satisfy specific requirements under the shareholders’ agreement.

Shareholders’ agreements typically provide selling shareholders with rights to a certain level of management assistance – which is critical to your pre-marketing and diligence processes - but subject to limits. This can range from a high level requirement that management has sufficient time to run the business (leaving room for debate as to what is “reasonable” levels of assistance) to detailed parameters, such as limits on the number of management presentations and diligence sessions management may attend.

A critically important question is always how to incentivise management, given that a stake sale is unlikely to trigger their existing equity incentives. If the shareholders’ agreement does not expressly permit transaction bonuses on stake sales, you may face hurdles: co-shareholder veto rights over new bonus schemes (even if not funded by the JV company) and potential tax implications for the JV if you pay management directly.

In short

A stake sale can be an efficient way to unlock value, but a successful outcome depends on a critical early assessment. Answering these five questions enables you to design a process that navigates the governance framework, engages the right buyers, and maximises your chance of achieving a clean, well-executed exit.

Remember: When negotiating a new shareholders’ agreement, consider if the information-sharing and transfer provisions allow for a sensible sales process. When an opportunity arises to amend an existing agreement, consider if any changes are required to reflect shifts in market practice.