Power transactions and trends

2017 was another stellar year for mergers and acquisitions (M&A) in the global power and utilities (P&U) sector.
Deals hit an eight-year high in terms of both value (US$200.2b) and volume (516).
Key figures:
• US$63.3b deal value in networks
• US$55.1b deal value in “others,” including integrated and water and wastewater
• US$42.8b deal value in renewables
• US$39b deal value in generation
• 35 multibillion-dollar transactions, contributing 77% of total deal value
• 10% increase in deal volume from 2016 driven by a 28% rise in renewable energy deals
• Corporate buyers invested 1.6x more than financial investors The year’s investment agenda was
dominated by several themes:
Buyers favor safe investments with long-term stable returns
In a global marketplace with low (but increasing) interest rates and excess capital, investors continued to
look to yield investments delivering long-term stable returns. Transmission and distribution (T&D) and integrated
assets attracted US$100.3b (50.1%) of total deal value in 2017, with US$57.8b of these deals in the
Americas (58% of total deal value for that region), US$25.6b in Asia-Pacific (26% of total deal value) and US$16.9b
in Europe (17% of total deal value).
Corporate investors were the dominant buyers of these assets, investing US$82.7b, or 82%, of total deal value.
Renewable energy assets backed by a power purchase agreement (PPA) also attracted buyers, and investment
in renewables increased 1.5x in 2017. Most value was contributed by European deals (US$15.1b), followed
by those in the Americas (US$14.2b) and Asia-Pacific (US$13.5b). Financial investors invested 65% (US$27.9b) of
total deal value.
Consolidation and acquisition of independent power producers
(IPPs) drove up deal value Market fundamentals no longer support highly leveraged IPPs, and
2017 saw the re-emergence of M&A activity involving these assets.
The trend was particularly strong in Europe and the US, where deals involving these assets grew from
US$15.2b in 2016 to US$33b in 2017. Many of these deals centered on reducing the debt of distressed
IPPs and capturing the value of operational synergies.

Fuente: EY

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