Alternative Energy Investments Survives In 2008, Despite The Financial Crisis
Alternative Energy Investments Survives In 2008, Despite The Financial Crisis Value Of Alternative Energy Investments Increased 8% In 2008 Investments in the alternative energy sector recorded an increase of around 8% in deal value to $186 billion in 2008, compared to $172 billion in 2007, according to GlobalData’s Annual M&A and Financing Trends in 2008. However, the number of deals recorded a marginal decrease of around 1% to reach 1,575 deals in 2008, the decline being mainly due to global financial crisis. Other factors, such as technology improvement, increasing political support and energy security ensure a bright future for the industry. The first half of 2008 saw alternative energy investments reaching $93 billion, up 49% on the same period in 2007. However, the second half of 2008 reported a decrease of 15% in the value of deals compared to the second half of 2007, representing fewer investments in the sector owing to the ongoing financial crisis. EDF Emerges as Top Deal Maker EDF Group was the largest alternative energy deal maker, reporting 14 deals worth $36.59 billion in 2008. RWE AG, Iberdrola, AREVA, and E.ON AG were also among the top deal makers, participating in a significant number of alternative energy deals in 2008. Morgan Stanley ranked first in the list of financial advisors by participating in 72 alternative energy transactions worth $6 billion, while Troutman Sanders LLP ranked as the top legal advisor in the alternative energy market in 2008. Mergers and Acquisitions – Dominant in Alternative Energy Deal Flow Mergers and acquisitions accounted for around 30% of the total alternative energy deals, with deal flow increasing from 493 deals worth $71 billion in 2007 to 499 deals worth $73 billion in 2008. Despite the credit crunch, mergers and acquisitions in alternative energy reported increasing deal values this year. 438 partnership deals were announced in 2008, the second most common type of alternative energy deals reported in 2008. Some of this represented companies entering into partnership agreements to survive in tough market conditions. Private Equity and Venture Capital Focus On Alternative Energy Private Equity and venture capital firms spent around $16 billion new investments in alternative energy in 2008, a rapid increase over 2007. When crude oil prices were at their peak in the second quarter of 2008, the market gained a large number of investments. Magnum Capital’s acquisition of an interest in Enersis S.A., a wind generation company, for $1.5 billion was one the major private equity deals reported in 2008.
Stable Market for Capital Raising In Alternative Energy Capital raising through equity and debt increased slightly from $95 billion in 2007 to $97 billion in 2008. However, the number of deals declined from 501 deals in 2007 to 400 deals in 2008. The biggest public market financing of 2008 was EDP Renovaveis’ IPO for $3 billion in Portugal. More Information: