There has been a significant shift towards renewable energy investment in recent years and the appetite for buying and selling businesses within this space is growing all the time.
A new report from KPMG entitled 'Great Expectations' looks at the healthy mergers and acquisitions market within the renewable energy industry. It questioned some 200 senior executives from a range of global financial funds and corporations to establish their attitudes towards the market. The report found that the average deal value within the renewable energy industry increased by 31 per cent in the final half of 2017, while the volume of M&A deals increased by eight per cent.
Analysts claim there are a number of factors driving the increase in M&A activity within the industry, not least being the need for countries around the world to meet their Paris Agreement targets. This high profile global effort to reduce the use of non-renewable energy and cut carbon emissions has spurred massive investment and growth – and where there's investment and growth, business buyers and sellers, as well as private equity investors, will be looking to acquire their slice of the pie.
The KPMG survey asked the executives to give their view on who the main acquirers will be within the renewable energy space over the coming year. Interestingly, half of them said financial buyers and half said corporate buyers overall. However, those surveyed thought that independent power firms, general utility firms and oil and gas firms were more likely to be purchased by corporate buyers than financial investors.
The survey looked at a number of areas in particular, including the automotive sector, where the move towards electric and hybrid vehicles has sped up significantly in recent years. It commented: “There are plenty of opportunities to be found. The renewables revolution offers technology-driven energy generation and distribution, consistently and at an increasingly reasonable price.
“Innovative technology, designed to increase and maintain security of supply and meet growing consumer demand, is being introduced with impressive speed.”
KPMG also questioned the executives about their views on the obstacles that lie in the way of investors looking to buy up their own renewable energy firm. The research came up with some interesting results. In the ASPAC region, respondents cited access to financing as a major obstacle to doing deals within the space, while EMA region respondents said the regulatory environment could stand in an investor's way.
Overall, though, planning permission was cited as the biggest difficulty when looking to do deals in the sector, with the instability of incentives and changes in technology coming in second the third.
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