World energy paradigm shift leading to record renewables M&A activity
9 June 2010
A paradigm shift in world energy markets towards renewable portfolios is leading to a record high in mergers and acquisitions (M&A) activity in the renewable energy space, according to a report recently issued by M&A International Inc., the world's largest independent M&A alliance.
Renewable energy accounted for 4.4% of global energy production in 2008. However, in 2009, power generation investment in alternative energy exceeded investments in traditional fossil-fuel powered generation for the second consecutive year. To benefit from the growing importance of renewable energy, industry players have actively increased their renewable portfolios using M&A to buy capacity and integrate horizontally and vertically. This is evidenced by a 19% compound annual growth in renewable energy M&A since 2007.
Pure-play alternative energy companies have emerged as the leading deal-makers, accounting for 40% of the M&A deal volume between 2007 and 2009. Wind energy has been the most active sector, accounting for the majority of both deal volume (66%) and deal value (77%).
Sustainable businesses
Future M&A activity within the sector is expected to be largely policy-driven. While large traditional power generators will need to expand their renewables footprint in order to meet their emission-reduction targets, pure-play generators see an opportunity to build sustainable businesses with government support via subsidies and incentives.
The M&A International report predicts that M&A activity will accelerate across the value chain, from manufacturing to service to maintenance, and will create sustainable alternative energy companies that thrive with much reduced government support.
Head of M&A International Inc.'s Energy Group, Paul Puri, commented: "The increasing marginal cost of hydrocarbon production together with technological improvements within the sector will significantly improve the economic case for alternative energy. This, combined with increased regulatory support and governmental incentives, will bolster the case for alternative energy investment."
Download the full report (PDF, 2.4MB).
About M&A International Inc.
M&A International Inc. offers the unparalleled resources of 43 independently-owned merger and acquisition specialists and investment banking firms in 41 countries in the Americas, Europe and the Asia-Pacific region.
Member firms work seamlessly with clients to originate and execute domestic and cross-border M&A deals in the mid-market sector.
For further information, please visit www.mergers.net
About IBI Corporate Finance
IBI Corporate Finance is Ireland’s leading corporate finance adviser, providing expert, independent advice. It acts for public, private and semi-state companies covering a wide spectrum of domestic and international transactions.
IBI Corporate Finance is a wholly-owned subsidiary of the Bank of Ireland Group and is the exclusive Irish member of M&A International Inc.