Strategic Investments Drive North American Power and Utilities Deal Activity in the First Quarter of 2015, According to PwC US

NEW YORK, May 5, 2015 /PRNewswire/ -- Total merger and acquisition (M&A) value in the North American power and utilities industry increased 55 percent as volume remained constant in the first quarter of 2015, compared to the same period the prior year, according to PwC US' quarterly deals snapshot North American Power & Utilities Deals: Q1 2015. While there was a drop in overall deal value and volume as compared to the fourth quarter of 2014, strategic investments drove deal activity during the quarter.

There were seven power and utilities transactions (with announced deal values greater than $50 million) accounting for $6.8 billion in the first quarter of 2015, compared to seven deals worth $4.4 billion in the first quarter of 2014.

"Despite the overall drop in first quarter deal activity compared to last quarter, we see deals being accomplished throughout the industry landscape including regulated, renewable and non-renewable generation deals," said Jeremy Fago, PwC's U.S. power & utilities deals leader.

Strategic investors accounted for 87 percent of total deal value and 71 percent of total deal volume during the first quarter of 2015, compared to 77 percent and 57 percent, respectively, during the same time period in 2014.

Renewable power deals in the first quarter represented only six percent of total deal value, with two deals worth $440 million. This was a significant decrease from 15 total deals worth $4.8 billion in the fourth quarter of 2014.

"Although we saw a significant drop in renewable deal activity compared to the fourth quarter of 2014, we see strong interest in contracted renewable assets and renewable development pipelines that will help to deploy and execute on the YieldCo business model," continued Fago.

Corporate transactions accounted for three deals totaling $5 billion, or 74 percent of total deal value in the first quarter of 2015. Compared to the same period in 2014, corporate deal value increased 51 percent in the first quarter of 2015. Continuing the fourth quarter's trend of corporate megadeals (deals greater than $1 billion) driving overall deal value, 70 percent of the first quarter's deal value was driven by one corporate megadeal valued at $4.7 billion. Asset transactions totaled four deals worth $1.8 billion — a 69 percent increase in total deal value compared to the first quarter of 2014.

Financial investors participated in two deals that accounted for $895 million in the first quarter of 2015. "Private equity players continue to look for strategic opportunities to both enter and exit power markets that will provide them with the opportunity to achieve desired returns," said Rob McCeney, PwC's U.S. energy & infrastructure deals partner.

According to PwC's recent CEO Survey, 52 percent of utilities are planning to form new alliances and 60 percent are working with competitors or would be open to doing so. "We've continued to see alliances and partnerships as one potential avenue for strengthening positions and allowing for improved opportunities, particularly in the renewable and transmission space," concluded 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.

About PwC US
PwC US helps organizations and individuals create the value they're looking for. We're a member of the PwC network of firms, which has firms in 157 countries with more than 195,000 people. We're committed to delivering quality in assurance, tax and advisory services. Find out more and tell us what matters to you by visiting us at www.pwc.com/US.

© 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

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SOURCE PwC US

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