North American Power and Utilities Deal Activity Surges in the Fourth Quarter of 2014, According to PwC US

NEW YORK, Feb. 5, 2015 /PRNewswire/ -- Fourth quarter merger and acquisition (M&A) volume in the North American power and utilities industry increased 57 percent over the previous year's fourth quarter volume, reaching a quarterly level not seen since 2008, according to PwC US' quarterly deals snapshot North American Power & Utilities Deals: Q4 2014.  Deal value also increased 68 percent compared to the fourth quarter of 2013, driven by corporate megadeals and a high number of renewable transactions.

There were 22 power and utilities transactions (with announced deal values greater than $50 million) accounting for $17.4 billion in value in the fourth quarter of 2014, compared to 14 deals worth $10.3 billion in the fourth quarter of 2013.  In 2014, there were 54 deals worth $67.7 billion, a 123 percent increase in total deal value from the 42 deals worth $30.4 billion in 2013.

"In 2014, deal activity ended on a high note in the power and utilities industry, building on the increase in both deal volume and deal value that was seen throughout the year. During the year, we saw deal activity driven by large corporate deals, renewable transactions and merchant power deals," said Jeremy Fago, PwC's U.S. power & utilities deals leader. "With investors' continued desire for yielding investments, we continued to see YieldCo activity driving renewable deal volumes, to support drop downs and growth for these investment vehicles."

Corporate transactions accounted for eight deals totaling $12.6 billion, or 72 percent of all deal value in the fourth quarter of 2014. Compared to the same period in 2013, corporate deal value increased 63 percent in the fourth quarter of 2014, driven in part by three corporate megadeals (deals greater than $1 billion), which accounted for $11.4 billion. Asset transactions totaled 14 deals worth $4.8 billion— an 83 percent increase in total deal value compared to the fourth quarter of 2013.

Renewable power deal volume represented 68 percent of total deal volume in the fourth quarter of 2014. The 15 renewable transactions totaled $4.8 billion, a significant increase compared to the previous year, which had six deals worth $664 million.

Financial investors participated in four deals that accounted for 35 percent of total deal value in the fourth quarter of 2014. "The competitive deal environment has contributed to rising control premiums and private equity investors have been selectively looking for entry points and opportunities in the industry," said Rob McCeney, PwC's U.S. energy & infrastructure deals partner.

Strategic investors accounted for 82 percent of total deal volume and 65 percent of total deal value during the fourth quarter of 2014, compared to 86 percent and 93 percent, respectively during the same time period in 2013.

"Going forward, larger utilities will stay focused on integrating previous megadeals, while continuing to keep an eye on the market for potential opportunities. We may also see increased interest in the vertical integration of downstream gas assets with power utilities, to act as a natural hedge for their gas-fired power portfolio and to support potential increases in demand for natural gas in the future," added Fago.

For more information on PwC's Power and Utilities and Deals capabilities, visit: www.pwc.com/us/en/power-and-utilities/index.jhtml and www.pwc.com/us/deals.

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