“With increasing concerns around climate change and the cost of energy, it’s no surprise to see growing appetite for investments in the renewable energy sector.”
Following the successive recent completions of the debt funded MBO of Realise Energy Services Ltd[i], and the investment into The Electric Storage Company[ii], HNH’s Head of Sustainability, Paul Gleghorne gives his thoughts on transactional activity for companies operating within the renewable energy sector.
“We have had an incredibly busy M&A market generally for 12-18 months, with a multitude of transactions across a range of sectors. The rhetoric from institutional investors remains positive around the availability of capital and their desire to deploy through all cycles. M&A activity and investments will continue but with a combination of cost inflation, supply chain issues, geopolitical uncertainty, and the remnants of COVID-19, we expect deals to be more strategic and measured, where strong management teams and deal structuring are likely to be key factors. Opportunities within defensive industries, especially where regulation is driving investment, will remain attractive.”
Paul explains that appetite for opportunities in the renewable energy sector has remained particularly high.
“The steep rise in the cost of energy has highlighted the overreliance on conventional energy generation. Many large energy users are now seeking to lower their marginal cost of energy use by installing solar panels and batteries or even opting to build their own renewable energy generation as private wire projects. In addition, it is becoming increasingly important for companies to demonstrate their green credentials to customers with ESG reporting requirements. On the other side, whilst financial returns ultimately drive decision making, investors are becoming increasingly eager to provide funding or invest in opportunities which assist in achieving their ESG targets.”
“It’s not all asset-based investments either, there are a host of companies providing services that facilitate the use of renewable energy. The recent deals of Realise Energy Services, who operate and maintain over 200 wind turbines across the UK, and power engineering and technology business The Electric Storage Company, attracted considerable interest with some interested parties citing green credentials as a contributing factor in their decision making.”
HNH Corporate Finance have a dedicated team with a specific focus on transactions in the sustainability sectors, ranging from sell/buy side M&A, raising project finance and appraising investment opportunities.
[i] The MBO of Realise Energy Services Ltd was funded by specialist credit provider Beach Point Capital
[ii] https://www.theelectricstoragecompany.com/2022/06/27/heron-bros-deliver-power-boost-for-the-electric-storage-company-with-significant-investment-and-strategic-partnership/
