In recent years, investors worldwide have had increasing interest in the renewable energy industry and renewable power assets. In many cases, this has translated to rapid renewable energy commercialization and considerable industry expansion. Renewable energy industries have been expanding quickly and by August 2008, there were at least 160 publicly traded renewable energy companies with a market capitalization greater than US$100 million. New global investment in renewable power and fuels including investments in hydropower reached US$310 billion in 2017. Technological innovations, cost efficiencies and growing popularity of green energy are driving renewables as a preferred source of energy.
Increasing Renewables M&A activity
M&A activity in the renewables sector is healthy and growing. Deal volumes have increased every year since 2010. In 2017, there were 406 deals globally, worth US$45 billion in aggregate. The value of global power and utility mergers and acquisitions reached an all-time high of US$180 billion in H1’18 and renewables sector deals accounted for almost half of all deals done at 63 transactions. Three renewable energy asset deals in the US alone during this period totalled US$3.8 billion in value. The European Union expects to achieve 32% of renewable energy consumption by 2030.
European Renewables M&A
In Europe in 2018, over US$5.5 billion was spent on energy services and new technology deals. New technologies are being invented to reduce the effective cost of installment, so that more people can afford renewable energy sources. These technological advancements and the future scope of new technologies within the sector are encouraging companies to invest in this sector. Many governments also provide regular incentives and subsidies to promote renewable energy production and use, increasing the value of the companies of this sector. Luxcara, a Germany-based asset manager for renewable energy investments, acquired a 100 MW Wind Farm in Valikangas from ABO Wind, a Germany-based developer of wind energy projects and biomass utilization, increasing Luxcara’ s presence in wind farms in the Nordic region.
North America Renewables Transactions
In Americas, companies are driven to invest in the renewable energy sector due to the increasing government spending, new policies in favor of renewable energy and regular incentives for use of renewable energy. DIF Management, the Netherlands-based fund management company, acquired 203MW wind farm projects in the US from Macquarie Infrastructure Corporation for US$215 million, which furthered DIF’s strategy to acquire infrastructure and renewable energy assets and adds to its existing portfolio of renewable energy assets in the US.
Asian Renewables Investment
In Asia, Thailand and India accounted for US$5.3 billion and US$3.2 billion of deals, respectively in 2018. In 2018, FDI inflows in the Indian non-conventional energy sector between April 2000 and December 2018 stood at US$7.5 billion. More than US$42 billion has been invested in India’s renewable energy sector since 2014. New investments in clean energy in the country reached US$11 billion. China led global outbound investment with US$31.2 billion of cross-border energy deals, in line with the country’s One Belt, One Road development strategy adopted by the Chinese government including infrastructure development and investments in renewable resources in various countries. In Japan, Tokyo Electric Power Company (TEPCO) launched a subsidiary to form joint ventures around the development of disruptive energy technologies.
Our Renewable Energy Transaction Services
The need for renewable energy investments as well as the need for renewables portfolio growth makes it desirable in many cases for companies to merge with or acquire other companies. Kapok Capital provides dependable and expert advisory for international M&A transactions in renewables sector. We help buyers in conducting commercial due diligence and financial assessment of target companies. We can help design the bid strategy in an auction process. Kapok Capital has strong experience in renewable energy mergers and acquisitions (M&A), including for Reservoir Capital Corporation in its 2018 acquisition of 60% of Kainji Power Holding Limited. Kapok Capital’s M&A services include the entire spectrum of deal advice, from due diligence of a target company to negotiation of the sale and purchase agreement.