North American power and utilities M&A activity increases
"We saw a notable rise in deal activity in the third quarter and expect that activity to continue in future quarters as the hunt for yield and rebalancing of portfolios continues," said Jeremy Fago, PwC's U.S. power & utilities deals leader.
There were 12 power and utilities transactions greater than $50 million in the third quarter of 2013, compared to seven deals in the previous quarter and eight during the third quarter of 2012.
While volume increased, the total value of deals worth $50 million or more declined to $4.6 billion from $12.5 billion in the second quarter of 2013, largely due to one mega deal worth $10.4 billion in the second quarter. Excluding that deal, third quarter total value increased 115 percent over the second quarter's total of $2.1 billion.
Strategic investors accounted for 72 percent of deal value in the third quarter of 2013, compared to 100 percent in the second quarter, as the sector increased financial investor activity.
"While there has been continued interest from private equity for quality assets with stable cash flows and/or attractive value potential, we saw this investor group land more deals in the third quarter of 2013 compared to the previous quarter, and we expect this interest to continue going forward," added Rob McCeney, PwC U.S. energy & infrastructure deals partner.
There were three renewable power deals in the third quarter of 2013. "Renewables continue to attract investors seeking stable, predictable cash flows and we expect the industry to continue its consolidation as thirst for yield and uncertainty around incentives remains," added Mr. Fago. ■