Renewables M&A Hits New Record
OREANDA-NEWS. February 17, 2012. Deals for ‘new generation’ renewable technologies – wind, solar, biomass - are entering the big time driving the market to new record highs, reports PwC in its annual global analysis of merger and acquisition (M&A) transactions in the renewable sector, reported the press-centre of PwC.
Deal values rose 40% year on year, from USD 38.2bn in 2010 to a record level of USD 53.5bn in 2011. Billion dollar deals dominated, as solar, wind and energy efficiency deals overtook hydropower as the driver for big deal values for the first time. Buoyed by the increase in big transactions, deal value in these two sectors nearly doubled year on year. Together, they account for the vast majority (79%) of increase in the total value of all renewables deals. One in every three deals last year was solar and overall deal value for the sector is up 56% from USD 10.2bn to USD 15.8bn.
Alexander Chmel, utilities leader, PwC Russia, said:
“Dealmaking in the renewables and energy efficiency sectors is intensifying as the sector evolves. Sustained high deal numbers and record total value reflect a maturing of the sector. The trend is all the more noteworthy given the uncertainty in the market and in government policies on renewables. We believe that deal flow will continue to be significant in the medium term.”
In 2011 European deal volumes dipped 6%, but overall value rose 80% from USD 16.7bn to USD 30.0bn.
North American deal volumes dipped 5%, with deal value also down 5% from USD 13.0bn to USD 12,4bn
In South America deal volumes rose 90%, with total value up from USD 3.2bn to USD 6.8bn. As for Asia Pacific (including Australasia), here deal volume was down 26% but value rose 15% from USD 4.0bn to USD 4.6bn.
Paul Nillesen, global partner, PwC renewables noted:
“US and European manufacturers are coming under cost pressures. They are not alone. Some Chinese manufacturers also face heavy debt and are coming under competitive strain. There is significant overcapacity in China. The result is likely to be a succession of tie-ups within and between the main manufacturing territories of the US, Germany and China leading to a smaller number of big global players.”
PwC expects to see a smaller number of global players in the solar market, the report also says that consolidation among larger players is likely to occur in the windpower sector.
Continued rolling uncertainty on the eurozone crisis will make the deal environment much more difficult for 2012 according to the report. A deeper crisis would undoubtedly dampen deal flow further, but Alexander Chmel said the market uncertainty might not block the big deals:
“Staying out of the markets in the hope things will improve cannot be assumed to be the right strategy. If a deal is highly strategic, and mission critical, then parties will still feel it is worth doing on the right terms.”
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