Transactions in global power and utilities sector gaining momentum

A report from EY says that the global power and utilities (P&U) sector is gaining momentum with 45 per cent of companies ready to pursue acquisitions in the next 12 months.

EY’s 12th biannual Power & Utilities Global Capital Confidence Barometer found overwhelming growth in 2014 with similar levels expected to be reached in 2015.

The analysis covered 1,600 global executives in 54 countries, with 74 respondents from the P&U companies with more than 64 per cent at CEO, CFO and other C-suite levels.

The Barometer highlights executives’ growing confidence in the global economy and in the number and quality of transaction opportunities available in the sector. Together these forces are setting the stage for a robust M&A market in the year ahead.
Matt Rennie
Matthew Rennie, EY’s Global Transactions Leader for Power & Utilities, said, “Appetite for M&A is steadily increasing in the sector. Consolidation in the US and China, divestments driven by debt reduction and portfolio optimization in Europe, attractive renewable energy assets and energy reforms continue to generate new transaction opportunities. Now, with increased confidence in the global economy and corporate earnings, companies are ready to take hold of those opportunities and transact.”

Sixty-four percent of survey respondents identified innovative investments — including acquiring relevant energy services and technology firms — as the primary focus of planned M&A.

The Barometer shows the majority of utilities (79 per cent) are focused on small- and mid-cap deals of less than US$250m over the next 12 months as they look to build new capabilities to keep pace with today’s changing business environment. 

Rennie added: “Governments around the world are adopting energy reform and unbundling initiatives to improve efficiencies and increase investment. These efforts are opening up energy markets to new competition — and transaction opportunities. Japan has welcomed non-conventional players into the market with close to 500 new power producers and suppliers now registered

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