Nuclear Energy Quarterly Deals Analysis: M&A and Investments Trends - Q1 2010

Nuclear Energy Quarterly Deals Analysis: M&A and Investments Trends - Q1 2010

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GlobalData's "Nuclear Energy Quarterly Deals Analysis M&A and Investments Trends - Q1 2010" report is an essential source of data and trend analysis on the Mergers and Acquisitions (M&A) and financings in the nuclear energy market. The report provides detailed information on M&As, equity/debt offerings, Private Equity and Venture Capital (PE/VC) and partnership transactions registered in the nuclear energy industry in Q1 2010. The report provides 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 PE, VC and advisory firms in the nuclear energy industry.

Data presented in this report is derived from GlobalData's proprietary in-house Nuclear Energy eTrack deals database and primary and secondary research.

M&A Activity Increased In The Nuclear Energy Market In Q1 2010

M&As and asset transactions, which include changes in ownership and control of companies or assets (GlobalData considers this value as not a new investment into the market), in the nuclear energy industry witnessed an increase in deal value, with $8.7 billion worth of transactions in Q1 2010 compared to $1.5 billion in Q4 2009. The huge increase in deal value in Q1 2010 can primarily be attributed to the landmark deal of FirstEnergy's merger agreement with Allegheny Energy, valued at $8.5 billion. Further, the number of deals remained flat, with 28 deals in both Q4 2009 and Q1 2010.

GlobalData expects that nuclear power, with the high technology mix and strong clean energy fundamentals, will beat the traditional competing power generation technologies, resulting more positive tends in M&A deal making activity in the coming years.

New Investments In The Nuclear Energy Industry Declined By 39% In Q1 2010

Investments in nuclear energy companies, including new investments through equity/debt offerings and financings by PE/VC firms reported a decrease of 39% in deal value and 61% in the number of deals, reporting 49 deals worth $11.4 billion in Q1 2010 compared to 126 deals worth $18.7 billion in Q4 2009. A relatively tight financial market, coupled with certain nuclear energy companies' poor stock performance and a high risk in terms of return on investments in the capital intensive nuclear projects, are affecting the total new investments in the market.

GlobalData expects that the clean energy theme will certainly see new investments in the nuclear energy market, as nuclear power is capable of reducing carbon emissions when compared to traditional coal or gas fired power plants.

According to Uma Bhanu Kondury, Analyst at GlobalData, "Although nuclear power enjoys the benefit of low carbon emitting technology, the higher risks involved in undertaking nuclear power projects during times of financial crisis have had a significant impact on investments in the sector."

Decreased Financing Through Equity and Debt Offerings In Q1 2010

Global equity offerings, including Initial Public Offerings (IPOs), secondary offerings, and Private Investment in Public Equities (PIPE) witnessed a decrease of 33% in the number of deals and 96% decrease in deal value, reporting 28 deals worth $129 million in Q1 2010 compared to 42 deals worth $3.4 billion in Q4 2009. Capital raising in the public markets was not particularly lucrative due to the credit crunch.

PIPEs witnessed a decrease of 32% in deal value from $1.3 billion in Q4 2009 to $0.1 billion in Q1 2010. The huge deal value in Q4 2009 was due to the big ticket deal of Dongfang Electric's private placement of $740 million. Further, secondary offerings registered a decrease of 57% in the deal value, with $30.9 million in Q1 2010 compared to $71 million in Q4 2009.

Debt offerings, including public and private debt placements, by nuclear energy companies have seen a decline of 76% in the number of deals and 26% in deal value, reporting 84 deals worth $15.2 billion in Q1 2010 compared to 20 deals worth $11.3 billion in Q4 2009. In particular, debt placement through public offerings saw a huge drop in the number of deals, from 73 deals in Q4 2009 to 11 deals in Q1 2010, a decrease of 85%. Debt financing for capital intensive nuclear energy projects remained difficult, with the continued burden on return on investments in the market along with the banks' general reluctance to provide debt. On a year-on-year basis, capital raising through debt offering declined by 78% in Q1 2010, compared to $52 billion in Q1 2009.

Decreased Investments In Europe And Asia Pacific In Q1 2010

Europe and the Asia-Pacific witnessed a decrease in investments, reporting $7.6 billion and $542 million respectively in Q1 2010, compared to $13.2 billion and $2.8 billion respectively in Q4 2009. The unstable financing environment coupled with commercial banks' reduced credit for nuclear energy projects led to a decrease in investments in Q1 2010. Further, South and Central America and the Middle East and Africa witnessed a decrease in the number of deals and deal value, reporting nine deals worth $119.5 million in Q1 2010 compared to 12 deals worth $252.7 million in Q4 2009.

In addition, the North America region reported an increase in deal value with a decrease in the number deals, reporting 46 deals worth $11.9 billion in Q1 2010 compared to 105 deals worth $3.9 billion in Q4 2009.

The nuclear energy market is still dominated by several companies in Spain, Germany and the US, and to an extent the UK, but the delay in the policy revisions supporting clean energy and the nervous financial market with certain bottlenecks is affecting the overall investments in the nuclear energy market.

According to Uma Bhanu Kondury, Analyst at GlobalData, "the increased investments in the North American region can be attributed to the loan guarantee announcements by the Obama Administration, while in the other regions, credit concerns have been the chief reasons for the lower volume of investments. For more details, please vist http://www.reportreserve.com/reportdet.php?company=GlobalData&reportid=10202

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