PwC: Institutional M&A investment share doubles in power and renewable sector

By Rob Starr, Content Manager, Big4.com

PwC reports the M&A investment share from institutions, such as insurance, pension and sovereign wealth funds, has more than doubled year on year, according to PwC’s annual Power and Renewables Deals report. Differences in corporate appetite have the potential to add to deal flow. While state-owned enterprises in China and trading houses in Japan are very much in an expansionist mode, many European power utility companies remain more tilted towards the divestment rather than the acquisition side of the deal table.

Significant renewables deal flow – there is potential for an unprecedented flow of deals for onshore wind generation assets in Europe with an estimated potential total sales value of US$4–5bn coming onto the deal table in the last few months. In the Asia Pacific region, the report highlights strong wind project deal flow in Australia in 2013, with interest high from Chinese and Japanese investors as well as Australian pension funds.

Rob McCeney, partner, US power and utilities, PwC, said:

“Increased exports to higher priced markets, a shift to gas-fired base load generation, growing industrial consumption and expanded uses of gas for transportation fuels and derivative products will all start add to upward gas price pressure over the next few years. It’s very possible that we will see moves, particularly from private equity buyers, for currently cheap assets that could gain from a longer term upward gas price trend.”