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Q3 2015

Power transactions and trends

Deals surge as utilities pursue growth and synergies with other sectors

The global power and utilities (P&U) sector witnessed a sharp upturn in M&A activity in Q3 2015, reaching a five-year high dominated by US megadeals.

Key regional trends include:

  • Europe: Activity hovers at a six-year low, with the majority of Q3 deal value contributed by the renewable energy segment.
  • Asia-Pacific: Chinese consolidation and interest in the Indian renewable sector remain the key drivers.
  • Americas: Surging activity reflects the increased impact of rising environmental costs and reducing load growth. Some of the largest deals, including Southern Company’s US$12b acquisition of AGL Resources, demonstrate a trend to diversify portfolios towards stable, regulated assets.
  • Africa and Middle East: Foreign investors remain attracted to the region as many countries diversify their energy mix, particularly towards renewables, to meet growing demand.

While regulated T&D assets will continue to command premium valuations, we expect the increased cost competitiveness of new technologies, such as integrated solar-plus battery systems, to begin to challenge traditional utility business models. This may impact regulated capex and asset valuations in the future.

We expect P&U transactional strategies to be increasingly influenced by the convergence of sectors aimed at capitalizing on synergies and unlocking further revenue potential.

Global P&U deal value and volume (Q3 2013–Q3 2015)

EY - Global P&U deal value and volume (Q3 2013–Q3 2015)

Source: EY analysis based on Mergermarket data

Global P&U deal value by region (US$b, Q3 2013–Q3 2015)

EY - Global P&U deal value by region (US$b, Q3 2013–Q3 2015)

Source: EY analysis based on Mergermarket data

EY - Power transactions and trends: Q3 2015