Canadian investors are leading players in a robust merger and acquisition (M&A) field in the global power and utility sector, Utility Dive reports, citing a new report from consulting firm EY.
The sector’s M&A activity in the first three months of 2017 reached “a reported deal value of $44.5 billion, a seven-year high,” the utility-focuses news outlet reports. “Transmission and distribution, and renewable energy assets backed by power purchase agreements, dominated” the first quarter’s activity, accounting for nearly 80% of the total. Of that, the lion’s share took place in the western hemisphere, followed by the Asia-Pacific. Moreover, “growth in deal value for renewables was higher than any other sector in Q1 2017, when compared with Q4 2016, and all other sectors declined in total deal value.”
Canadians were prominent among the deal-makers, EY found. “The top five Americas deals in the first quarter involved Canadian investment in the U.S., and three of those deals were in the renewables sector,” Utility Dive writes. “The largest deal of the quarter was Canadian utility AltaGas’ US$6.3 billion acquisition of WGL Holdings of the U.S.”
Six in ten utility executives who answered EY’s survey anticipated making acquisitions in the year ahead, a 12% jump from the previous survey.
However, those investors may find the market difficult to read, as “the disruptive effects of higher levels of renewable energy penetration, greater consumer participation in their energy choices, and innovation that is eroding traditional business models, make power markets more complex and increase the risk of unpredictable government interventions in market design.”