The report expects that the market will improve further as industry players will begin to seek opportunities for consolidation, and many companies are looking to larger potential economies like China and India in light of the expected economic recovery boost. Going forward, the ease of financing and government grants will also uplift the alternative energy industry.
Mergers & Acquisitions Leaped In The Alternative Energy Market In 2009
M&A activity increased in the alternative energy market, reporting $86 billion in 2009 compared to $60.8 billion in 2008, an increase of 41%. This can primarily be attributed to some big ticket deals in Q1 2009 and Q4 2009: Enel’s acquisition of a 25% interest in Endesa for $12.2 billion; RWE’s acquisition of Essent for $9.8 billion; Vattenfall’s acquisition of a 49% interest in Nuon for $6.2 billion; Alstom and Schneider’s proposed acquisition of Areva T&D for $5.8 billion; and Panasonic’s acquisition of a 50.2% stake in Sanyo Electric for $4.5 billion.
Technology wise, M&A activity in the wind power segment witnessed a promising increase, reporting investments of $41 billion from 100 deals in 2009, compared to $30 billion from 149 deals in 2008. Companies with strong balance sheets and institutional investors’ boosted confidence has led to a continual increase in investments in the wind turbines segment, as investors are not willing to expose themselves to unpredictable fuel and carbon prices. Further, the number of deals decreased from 567 deals in 2008 to 380 deals in 2009. The majority of the medium size companies were cautious in the capital intensive market.
According to Pavan Vyakaranam, Analyst, "The increase in investments is mainly due to the improving market conditions and growing investor confidence in the longevity of alternative energy sources. Markets will continue to improve and the alternative energy industry is expected to see increased M&A activity in the coming year."
Increased Asset Financing In 2009
Asset financing, including project financing, self funded, tax equity, lease and bond financing and bridge loans for new building projects, acquisitions, and the refinancing of assets, saw a huge growth, registering a compound annual growth rate (CAGR) of 77.1% from 2005 to 2009.
The industry reaped $327.8 billion of funds in asset financing in 2009, an increase from $33.3 billion in 2005. On a year-on-year basis, the market registered an increase of 13% in terms of the number of deals and 81% in terms of deal value, reporting 1,497 deals worth $327.8 billion in 2009, compared to 1,323 deals worth $181.3 billion in 2008, driven by increasing global demand for alternative energy sources.
The wind energy segment dominated the asset financing market, with around 46% of total new investments in wind energy projects in 2009. This can be primarily attributed to the decreased risk exposure in the wind energy segment, compared to other alternative energy sources. Some of the major deals in 2009 were the Gansu Provincial People’s Government’s investment of $17.6 billion in the Jiuquan wind power project in China; and Svevind and Enercon’s investment of $6.6 billion in the Markbygden wind farm located in Sweden.
In particular, self-funded projects, which include projects that have been financed through the company’s own balance sheet either through cash or stocks, witnessed an increase in the number of deals and deal value in 2009. The market reported 721 deals worth $245 billion in 2009, compared to 644 deals worth $132.3 billion in 2008, an increase of around 85% in terms of deal value.
The wind energy segment marked a significant presence with a total of $119.9 billion of self-funding towards projects in 2009. Further, the majority of companies in the Asia-Pacific focused on investing in alternative energy projects, reporting $93.8 billion of investments in 2009, representing 38% of total self-funding investments in 2009.
According to Pavan Vyakaranam, Analyst, "Asset financing will continue to be on a rising trend, driven by environmental necessity, coupled with the declaration of a new budget in Q2 2010. The sector is poised to see an uptrend as the clouds of the economic downturn will wither out soon."
Increased Financing Through Debt Offerings In 2009
Debt offerings, including public offerings and private debt placements, witnessed a gradual increase in the deal value since 2005. On a year-on-year basis, the market reported 490 deals worth $200.7 billion in 2009, compared to 416 deals worth $119.2 billion in 2008. This signifies the companies’ continued positive outlook and confidence in the debt market. Debt offering in the alternative energy market witnessed a CAGR of 44.9% in investments from 2005 to 2009.
Global equity offerings, including initial public offerings, secondary offerings, and private investment in public equities (PIPE), witnessed an increase, reporting $58.3 billion of equity fund raising in 2009, compared to $47.3 billion in 2008. This can primarily be attributed to the most promising market for alternative energy in the future and the positive market recovery signs in the fourth quarter of 2009, which will certainly lead to flourishing investments in the near future. PIPE deals garnered large chunk of deals, reporting 177 deals worth $30.7 billion in 2009. The wind energy segment topped the list in the equity raising table, with 102 deals worth $24.7 billion in 2009.
Venture Capital Investments Decreased By 60% in 2009
Venture capital (VC) investments in the alternative energy industry declined by around 60% in 2009, reporting $2.8 billion in 2009, compared to $7.1 billion in 2008, showing that venture capitalists are taking time to explore the big investment opportunities in the alternative energy market. The decrease in investments can primarily be attributed to the global credit freeze that made VC companies more and more cautious on the investments in new start up companies. Solar companies accumulated the majority of the VC funding with $1.2 billion in 2009, followed by the biopower and energy efficiency segments with $477 million and $464 million respectively. On a year-on-year basis, growth capital and expansion financing dominated the market, reporting 74 deals worth $1.9 billion in 2009.
Khosla Ventures emerged as the top VC firm by providing financing worth $140.8 million for eight alternative energy companies during 2009.
According to Pavan Vyakaranam, Analyst, "The plunge in venture capital financing in 2009 is mainly due to the cautious approach of investors towards large scale projects. Venture capitalists have embraced a wait and see approach in expectation of better policy initiatives from the respective federal governments in the coming quarter. The emergence of new hotspots and increased government support for the alternative energy sector is expected to attract more venture capital investments in the coming years."
Investments Soared In The Asia Pacific Market By 172 % In 2009
Alternative energy investments in the Asia-Pacific market soared, reporting $161.8 billion in 2009 compared to $59.5 billion in 2008, representing an increase of 172%. This can primarily be attributed to the long term positive outlook of companies towards the most promising emerging economies like China and India, which are poised with a huge growth opportunity in the near future. Further, the focus on scaling up Chinese generation capacity to meet demand has been identified as one of the ways to bring down its emissions as a proportion of GDP.
Further, investment in the European market also soared by 63%, reporting $254 billion in 2009, compared to $155.5 billion in 2008. This can primarily be attributed to the growing investors’ interest in the promising wind sector, which kept the alternative energy sector buoyant though the liquidity squeeze. The European wind energy market is less reliant on bank project financing, due to an increasing share of new installations financed by institutional investors and infrastructure funds, and from power company balance sheets. In addition, North America reported an increase of around 19%, reporting $215 billion in 2009, compared to $181 billion in 2008.
Alternative Energy Annual Deals Analysis 2010
The "Alternative Energy Annual Deals Analysis 2010" report is an essential source of data and trend analysis on the mergers and acquisitions and financings in the alternative energy market. The report provides detailed information on M&A, Equity/Debt Offerings, Private Equity, Venture Financing and Partnership transactions registered in the alternative energy industry in 2010. The report portrays detailed comparative data on the number of deals and their value in the last five years subdivided by deal types, segments, and geographies. Additionally, the report provides information on the top financial advisory firms in the alternative energy industry.
– Analyze market trends for the alternative energy market in the global arena
– Review of deal trends in wind power, solar energy, biopower, geothermal, transformation technologies, hydrogen & fuel cell markets
– Analysis of M&A, Equity/Debt Offerings, Private Equity, Venture Financing and Partnerships in the alternative energy industry
– Summary of alternative energy deals globally in the last five years
– Information on top deals happened in the alternative energy industry
– Geographies covered include – North America, Europe, Asia Pacific, South & Central America, and Middle East & Africa
– League Tables of financial advisors in M&A and equity/debt offerings. This includes key advisors such as Morgan Stanley, Credit Suisse, and Goldman Sachs