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February 25, 2019
According to Ernst & Young's (E&Y) data, global power and utility (P&U) transactions reached a new transaction value record in 2018, or $256.3 billion (226.6 billion euros), 19% of which came from renewable energy.
The total number of global transactions includes 546 transactions, of which 253 involve renewable energy. The total global transaction volume increased by 28% year-on-year, mainly due to a 2.5-fold increase in Europe.
According to Miles Huq, head of Ernst & Young's global power and utility transaction consulting, the P&U deal in Europe reached $126.5 billion in 2018, a "year of outstanding M&A deals in Europe." Among them, the most important transaction is the Eon Group's acquisition of Innogy for US$46.6 billion.
“Although companies account for 70% of all transactions and account for 80% of the total value of transactions, financial institutions have also generated great interest. We also see new energy markets continue to grow in size and importance, mainly due to consumption. Driven by demand and regulations. As we enter 2019, we expect continued growth in investment in renewable energy, energy storage and electric vehicle (EV) infrastructure,” Huq added.
Regionally, P&U transactions in Europe reached US$126.5 billion in 2018, compared with US$50.3 billion in the same period last year; US$98.9 billion in the Americas, US$102.2 billion in the same period last year; US$29.7 billion in the Asia Pacific region and US$46.7 billion in the same period last year. The Middle East and Africa region also received $1.2 billion in transactions in 2018.
In the Americas, the value of the US transaction fell by 7% year-on-year, but it remains the most attractive target country, with capital investment of $81.4 billion in 2018, including $55.1 billion in domestic transactions and $26.3 billion in entry activities. .
China was the largest foreign investor last year, with foreign investment reaching $34 billion, of which $32.6 billion was for Europe.
Huq expects that US investment in grid-side battery technology will continue to increase, and European utilities will pay more attention to renewable energy generation and EU investment in electric vehicles and grid-connected energy storage.
“In 2019, as interest rates rise, the macroeconomic situation remains unresolved, and political tensions have severely affected investors. We expect the M&A challenge to be more complicated. The market may turn to support lenders rather than borrowers and need to be higher and higher. Complexity to identify and ensure strategic investment opportunities,” Huq concludes.
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