No results have been found
See all results for
Why the potential end of cash is about more than money
7 Jan 2020 Banking and capital markets
As data personalizes medtech, how will you serve tomorrow's consumer?
13 Aug 2020 AI
No search results have been found
Welcome to EY Bahrain (EN)
You are visiting now EY Bahrain (EN)
13 Nov 2018 London, GB
Gas and renewables deals drive soaring power and utilities M&A
LONDON, 13 NOVEMBER 2018. A surge in gas and renewables deals in the third quarter of 2018 saw global power and utilities year-to-date deal value rise to a record US$241.8b, according to the EY Power transactions and trends: Q3 2018 (PTT).
Michael Curtis
EY Global Technology, Media & Entertainment and Telecommunications Media Relations and Social Media Assistant Director
Media relations and social media manager. Music enthusiast and occasional writer.
email LinkedIn Twitter
Related topics Energy reimagined Power and utilities
Year-to-date deal value reaches US$241.8b record despite regulatory challenges
57% of global executives expect to pursue a transaction in the next 12 months
Gas deals reach all-time high, while renewables represent 41% of deal volume
A surge in gas and renewables deals in the third quarter of 2018 saw global power and utilities year-to-date deal value rise to a record US$241.8b, according to the EY Power transactions and trends: Q3 2018 (PTT). Despite ongoing regulatory uncertainty and geopolitical tension, the latest EY Global Capital Confidence Barometer (CCB) also indicates that 57% of global sector executives expect to pursue a deal in the next year.
Following a record start to the year for M&A, deal activity across the sector remained buoyant despite a 25% quarter-on-quarter decline to US$61.9b from US$83b. Gas utilities transactions reached an all-time quarter high in 3Q18, representing 59% of global deal value (US$36.5b), with more than half (51%) of those deals conducted in the Americas (US$18.3b). All regions continued to pursue investment in renewables, with 58 deals accounting for 41% of global deal volume. In Europe, renewables represented 78% of deal value (US$8.1b) and underpinned a weaker-than-expected quarter.
Miles Huq, EY Global Power & Utilities Transactions Leader, says:
"The appetite for dealmaking remains robust among global power and utilities companies, particularly as the sector continues to seek investments in clean energy and emerging technologies. But with 39% of respondents to the latest EY Capital Confidence Barometer citing regulatory and geopolitical headwinds as the biggest risk to dealmaking over the next 12 months, ongoing trade tensions, in particular, have the potential to derail market outcomes. This calls for the introduction of tightened regulatory controls in what is an increasingly complex environment."
Renewable energy and gas utilities deals dominate across the globe
Deal value in the Americas saw a 7% increase quarter-on-quarter to US$28.8b, representing nearly half (46%) of total global deal value. The third quarter demonstrated continued investment appetite for renewable energy assets amounting to US$4.5b, including Consolidated Edison's announced US$2.1b acquisition of assets from Sempra Energy – further highlighting the impact of ongoing shareholder activism in the Americas. The US remained the top investment destination in the region, with 96% of deal value generated in the US market.
Despite a 78% decline in deal value in Europe to US$10.1b, offshore wind offered financial investors scale and strong returns, with US-based Global Infrastructure Partners agreeing to acquire a 50% stake in a 1.2 GW offshore wind farm from Danish company Ørsted A/S. The conclusion of negotiations among the 28 EU Member States around the future framework of the electricity market is expected to strengthen investment certainty into Q4.
Asia-Pacific saw a 118% increase in deal value quarter-on-quarter to US$22.5b, with much of the value attributable to announced plans to acquire Australia's APA Group for US$16.3b by CK Infrastructure, CK Asset and Power Assets Holdings. This deal was set to be the largest gas utility transaction to date, however, the federal government has issued a preliminary view that the deal may be blocked, with a formal determination to be issued shortly.
Economic confidence boosts sector dealmaking prospects
Looking ahead, the CCB indicates that sector leaders remain confident in the economy. With another year of strong GDP growth forecast, 86% of global power and utilities executives expect to see improving growth conditions over the next 12 months.
Huq says: "While power and utilities companies have seen stagnant growth due to rising energy efficiency and more distributed energy, interest rates remain at historic lows and confidence is growing around access to capital. Rising stock market and equity valuations are providing high stock currency for dealmaking, which in turn is prompting many companies to transact. Private equity firms are also showing interest in the sector. In this dynamic landscape, businesses are beginning to embrace disruption instead of seeing it as a barrier to growth."
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.
About EY's Global Power & Utilities Sector
In a world of uncertainty, changing regulatory frameworks and environmental challenges, utility companies need to maintain a secure and reliable supply, while anticipating change and reacting to it quickly. EY's Global Power & Utilities Sector brings together a worldwide team of professionals to help you succeed — a team with deep technical experience in providing assurance, tax, transaction and advisory services. The Sector team works to anticipate market trends, identify their implications and develop points of view on relevant sector issues. Ultimately, this team enables us to help you meet your goals and compete more effectively.
For more information, please visit ey.com/powerandutilities.
About EY Power transactions and trends: Q3 2018
The EY analysis and perspectives within Power transactions and trends are based on global financial releases and Mergermarket data, as well as global engagements conducted by EY member firms over the period 2012 to 2018. They provide an up-to-date assessment of outcomes and trends in the global utilities industry.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
Welcome to EY.com
In addition to cookies that are strictly necessary to operate this website, we use the following types of cookies to improve your experience and our services: Functional cookies to enhance your experience (e.g. remember settings), Performance cookies to measure the website's performance and improve your experience, Advertising/Targeting cookies, which are set by third parties with whom we execute advertising campaigns and allow us to provide you with advertisements relevant to you, Social media cookies, which allow you to share the content on this website on social media like Facebook and Twitter.
You may withdraw your consent to cookies at any time once you have entered the website through a link in the privacy policy, which you can find at the bottom of each page on the website.
Review our cookie policy for more information.
I decline optional cookies