Advisors working on solar-power deals in Europe, the Middle East and Africa (EMEA) must feel like someone trying to be discrete about a lottery win while everyone else complains about their bad luck.
While other dealmakers are fretting about the impact of interest rates on deal financing, working on solar-power deals must feel like a burst of sunshine on a cloudy day.
Transactions have been boosted by a combination of the energy transition, increasingly competitive photovoltaic (PV) tech and the need for energy independence, not to mention a glut of environmental, social and governance (ESG) funds.
The total deal volume for solar power in EMEA hit a record of EUR 11.1bn across 34 deals in 2022, according to Dealogic data.
This was 56% ahead of the previous record, EUR 7.1bn across 31 deals in 2018. So far, 2023 is off to a strong start, with total volume of EUR 3.4bn across 10 deals. This year-to-date result is already ahead of every full year up to 2017.
This year’s strong start has been helped by a blockbuster deal in Spain in March. X-ELIO shareholder Brookfield Asset Management [NYSE:BAM] agreed to acquire KKR’s [NYSE:KKR] 50% stake in the solar company, taking full control. The implied equity value was reported to be close to USD 2bn (EUR 1.9bn).
Here to help
In the US, government incentives from the Inflation Reduction Act (IRA) have fuelled dealmaking in the sector, as reported by Dealspeak North America in March.
Europe has kicked off its own response to the IRA, with the European Commission (EC) opting to significantly weaken its state aid rules (at least temporarily) so that it can unlock national spending into 'green' industries.
The relaxed rules will likely trigger a wave of investments from big EU member states like France and Germany into decarbonisation and clean energy projects, as well as stimulating funding in emerging industries like batteries, fuel cells and carbon capture.
The accompanying Net Zero Industry Act (NZIA), while short on EU-level funding, is intended to lessen the administrative burden and accelerate timelines for clean energy investments.
Bursting pipeline
The pipeline is already bursting with potential deal activity even before the European regulatory changes are implemented. So far in April, Mergermarket’s predictive intelligence has highlighted several deal opportunities in the sector, with many more available with a deeper search.
China National Machinery Import & Export Corporation (CMC) has mandated KPMG for a sale of a solar plant with 100 MW capacity in Hungary. Meanwhile, CLERE AG [CAG:ETR] has mandated M&A firm Finergreen to sell roughly 40 MW of PV assets in Italy.
EDP Renewables is in the midst of accepting first-round bids for the sale of wind projects with 260MW of combined capacity; and AXA Investment Managers, Omers Infrastructure Management and Swiss Life Asset Management are considering bidding for a minority stake in Igneo Infrastructure Partners’ Portugal-based renewable power producer Finerge.
With so much activity, it probably won’t be too long before dealmakers in other sectors notice their colleagues in solar power hiding their grins. How long before experts in other areas start brushing up on the basics of PV tech and asking their colleagues if they need a hand?
