Welcome to the Q2 2012 edition of Power transactions and trends, our quarterly report analyzing M&A and market trends in the global power and utilities sector.
In a sign of improved deal-making conditions and a number of quality assets coming to market, Q2 saw global power and utility deal value increase 84% and deal volume increase 20% over Q1.
A number of trends highlighted in our Q1 report continued to impact the market, including divestments from European utilities and increased participation from Chinese investors. We also saw financial buyers come to the fore in Q2, accounting for 55% of the total deal value of US$47.9b and five of the quarter's top 10 deals.
Q2 was dominated by a number of high-profile transactions, including the Tokyo Electric Power Company (TEPCO) transaction (US$12.6b) and finalization of the EDF/Edison deal (US$7.6b).
Following approval of the Exelon/Constellation Energy merger in Q1, Q2 saw the regulatory approval of the US$26b Duke/Progress Energy merger, a big milestone in the US M&A landscape. In Europe, GDF Suez completed a US$10.1b acquisition of the remaining 30% stake in International Power after making the bid in Q1.
The remainder of 2012 is shaping up as promising for deal-makers. With divestments here to stay, Asian and financial investors will continue to be the front runners for prized assets. Deal activity in the emerging economies of Brazil and Argentina is expected to move up, and we expect Canadian investors will continue to eye US utilities.
Global Transaction Advisory Power & Utilities Leader
The story in numbers, Q2 2012
- Global power and utilities deal value increases US$21.9b, with the TEPCO transaction contributing US$12.6b (or 26.3%) of total deal value. The number of deals increases 20% from Q1 2012.
- Surge in Asia-Pacific deal activity takes volume up by 20% and value by 84% on a quarter-on-quarter basis.
- Average deal value rises by 35% to US$855m, led by 8 deals in excess of $1 billion compared to 4 in Q1 2012.
- Financial buyers dominate top 10 deals and contribute 55% to the Q2 total deal value.
- Renewables M&A deal value declines 50% in the face of continuing subsidy uncertainty.