Alternative Energy Quarterly Deals Analysis Q4 2009
Alternative Energy Quarterly Deals Analysis Q4 2009
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Alternative Energy Quarterly Deals Analysis Q4 2009
Decreased Deal Activity In The Alternative Energy Market In Q4 2009
GlobalData's "Alternative Energy Quarterly Deals Analysis Q4 2009" report is an essential source of data and trend analysis on the Mergers and Acquisitions (M&A) and financing in the alternative energy market. The report provides detailed information on M&A, Equity/Debt Offerings, Private Equity, Venture Financing and Partnership transactions registered in the alternative energy industry in Q4 2009. The report portrays detailed comparative data on the number of deals and their value in the last five quarters subdivided by deal types, segments, and geographies. Additionally, the report provides information on the top private equity, venture capital, and advisory firms in the alternative energy industry.
Data presented in this report is derived from GlobalData's proprietary in-house Alternative Energy eTrack deals database and primary and secondary research.
Investments In The Alternative Energy Industry Declined By 34% In Q4 2009
Investments in the alternative energy industry continued to decline in Q4 2009, as the global credit freeze created a difficult operating environment for companies to survive in the market. Investments in the market decreased by 34% from $187.3 billion in Q3 2009 to $123.1 billion in Q4 2009. The number of deals also decreased from 800 deals in Q3 2009 to 729 deals in Q4 2009. On a year-on-year basis, the number of deals in the alternative energy market fell by 24% with 729 deals in Q4 2009 compared to 903 deals in Q4 2008, and the investment level remained standstill, reporting merely $123.1 billion in 2009 compared $121.8 billion in 2008. This can be attributed to the global credit crunch that had created havoc of problems for existing as well as new start up companies for the survival in the market.
Though overall Q4 2009 investments represented a slight disappointing ending to the year, GlobalData expects that the market will improve as industry players will begin to seek opportunities for consolidation in light of the expected economic recovery in the near future. The ease of financing and Government grants will also uplift the alternative energy industry.
Mergers & Acquisitions Increased In The Alternative Energy Market, While Asset Financing Decreased In Q4 2009
Mergers and acquisitions in the alternative energy industry witnessed a huge increase in investments to reach $20.8 billion from 101 deals in Q4 2009, compared to $3.6 billion from 74 deals in Q3 2009. This increase can be attributed to three big ticket deals: Alstom and Schneider's proposed acquisition of Areva T&D for $5.8 billion; Stanley's proposed merger with Black & Decker for $4.5 billion; and the Panasonic's acquisition of 50.2% stake in Sanyo Electric for $4.5 billion. Leaving these three deals into consideration, the overall M&A activity is still looked as a pressure driven, attributing to the big problem of reserves and financing issues in the tumbling market. On a high note, majority of the companies are still cautious in this capital intensive market. Overall, M&A activity has seen a good movement in wind energy sector with investments of $2.2 billion from 23 deals in Q4 2009. Companies with strong balance sheets and institutional investors' boosted confidence had led to a continuous increase in investments, as investors are not exposed to unpredictable fuel and carbon prices.
Asset financing, including project financing, self funded, tax equity, lease and bond financing, and bridge loans for new build, acquisition, and refinancing of assets, registered a decrease in the number of deals and deal value, reporting 348 deals worth $67.3 billion in Q4 2009, compared to 406 deals worth $110.4 billion in Q3 2009, a decrease of 39% in terms of deal value. Solar Trust of America's proposed project financing of $6 billion for Solar Thermal Power Plants in US, was the prominent financing in Q4 2009.
Technology wise, Hydro energy market accounted for 33% of the total new investments in projects in Q4 2009. Hydro-Quebec's announcement for the acquisition of hydro power stations from Energie NB Power for $4.7 billion and Government of Armenia and Government of Iran's plan to invest $2.4 billion in Meghri hydro power plant were some of the major deals recorded in Q4 2009.
According to Pavan, Analyst at GlobalData, "The Year 2009 ended on a positive note as far as Merger and Acquisitions are concerned; the credit goes to the handful of billion dollar deals that has happened towards the end of 2009. These recent developments lay the platform for expected positive developments in 2010."
Decreased Financing Through Debt Offerings In Q4 2009
Debt offerings, including public and private debt placements, by alternative energy companies has seen a drastic decline of 64% in deal value, reporting $20.9 billion in Q4 2009 compared to $57.6 billion in Q3 2009. Debt financing for large scale projects remained difficult with continued burden on return on investments in debt instruments market along with the banks' general reluctance to provide debt finance for projects. The number of deals also decreased from 104 deals in Q3 2009 to 86 deals in Q4 2009. On a year-on-year basis, investments declined by around 50% in Q4 2009, compared to $42 billion in Q4 2008.
Global equity offerings, including initial public offerings, secondary offerings, and private investment in public equities (PIPE), was almost stagnant registering 82 deals worth $13.1 billion in Q4 2009, compared to 72 deals worth $13.6 billion in Q3 2009. IPO garnered much of the deal value with $6.7 billion in Q4 2009 and PIPE deals garnered large chunk of number of deals with 48 deals in Q4 2009.
Venture Capital Investments Decreased By 38% in Q4 2009
Venture capital investments in the alternative energy industry declined by 38% in the fourth quarter of 2009, mirroring the global financial meltdown. Alternative energy companies raised over $568 million in Q4 2009 compared to $672 million in Q3 2009. The number of deals also decreased sharply from 53 deals in Q3 2009 to 33 deals in Q4 2009. VC investors slowed their strong investments in the sector and have remained cautious, echoing the "wait and see" sentiment. Solar companies accumulated majority of the venture capital funding with $256 million in Q4 2009. Growth capital/expansion financing dominated the VC market reporting 16 deals worth $291 million in Q4 2009.
Khosla Ventures emerged as the top VC firm by providing financing worth $140.8 million for eight alternative energy companies during Q1 2009 Q4 2009.
According to Pavan, Analyst at GlobalData, "Though the worst of the global economic slowdown seems to be over by 2009, the effect still seems to be present for the Venture Capital Investments in Renewable Energy Industry. Depleting Investments in Q4, 2009 has made it very essential to see the trends in Q1, 2010 which will set the trends for the whole year."
Investments Decline in Europe And Asia Pacific, While North America Investments increased By 13 % In Q4 2009
Europe and Asia Pacific witnessed a decrease in alternative energy market investments, reporting $23.6 billion and $37.2 billion respectively in Q4 2009, compared to $67.3 billion and $58.1 billion in Q3 2009. Unstable financing environment, coupled with commercial banks' reduced credit for renewable energy projects and companies reliant on bank lending and export credits, had led to a decrease in investments in Q4 2009. Following on the same line, South and Central America registered a decrease in investments with $8.5 billion in Q4 2009 compared to $11.1 billion in Q3 2009; and Middle East and Africa recorded $2.7 billion of investments in Q4 2009, compared to $5.7 billion in Q3 2009.
Further, North America registering an increase of 13% in investments to reach $51.1 billion in Q4 2009, compared to $45.1 billion in Q3 2009.
According to Pavan, Analyst at GlobalData, "North America is the only region that has registered a positive growth in Q4, 2009 compared to the previous quarter as far as renewable energy investments are concerned. However, in 2010, the Asian and European regional markets are expected to pick up and hence an increase in investments is expected in the two regions." For more details, please vist http://www.reportreserve.com/reportdet.php?company=GlobalData&reportid=10033
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