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.
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.
Wind and Solar, the Leading Sources Of Alternative Energy
The wind and solar segments were the most active sectors in the alternative energy industry with over 400 deals each in 2008. Wind turbines and solar photovoltaic cells experienced rapid growth because of technological developments. Investments in wind energy totaled $85 billion, while solar market attracted investments of $50 billion in 2008. “It is expected that wind segment will continue to attract more investments in the future, with the Department of Energy of the United States stating that 20% of all electricity production in the US is to be produced by wind by the year 2030. The solar market is also witnessing growth with the development of new solar vehicles, which will increase the demand for solar cells and solar panels in the near future”, says Shivangi Shah, Analyst at Alternative Energy Research, GlobalData
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