Renewables merger and acquisition activity falls in 2012

29/01/2013

But $7bn raised in final quarter of last year fuelling hopes for a better performance in 2013.

Mergers and acquisition activity in the renewables sector topped $7bn during the last quarter of 2012, the highest quarterly total for 18 months, according to new figures from consultancy giant PwC.

But the spike in activity was not enough to prevent total M&A value falling during 2012, with a total of 463 deals worth just under $18bn representing a 22 per cent drop in numbers on 2011's 594 deals and a 31 per cent fall on the $26bn of value clocked up.

However, PwC said the renewables sector remains a major growth market globally as demand for electricity is set to grow faster than any other form of energy, while increasing demand for gas means the continuation of the current "era of cheap US gas cannot be taken for granted".

PwC expects to see "a number of moves, particularly from private equity buyers, for currently cheap assets that could gain from a longer term upward gas price trend".

Moreover, it predicts "a substantial flow of deals" for onshore wind projects in Europe following $4bn and $5bn of asset sales that were announced towards the end of last year.

Meanwhile, a number of renewable power deals are expected in Australia as developers seek to sell on assets or utility companies rationalise their portfolios. PwC says interest is high from state-owned Chinese and Japanese investors as well as Australian pension funds.

In the US, the company said the two-year extension of the production tax credit for wind farms as part of the "fiscal cliff" package is likely to bring an uptick in transactions, while the solar power sector also received a boost with Warren Buffet's MidAmerican Energy Holdings Company sealing a $2.5bn deal for two major solar farms.

BY LE MY

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