Dive Brief:
- The total volume of North American power and utilities deals surged 57% in the fourth quarter of 2014 over the previous quarter, from $11.1 billion to $17.4 billion, according to analysis by PwC.
- Average deal size, however, decreased 14% from the previous quarter from $924 million to $790 million.
- Three deals greater than $2 billion drove the quarter's growth, and PwC noted financial deals accounted for 35% of deals by value, up from 24% during the previous quarter.
Dive Insight:
Last year's power and utility deal activity was largely driven by large corporate deals, renewable transactions and merchant power deals, according to PwC, and the industry closed 2014 with a surge in overall value.
“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," said Jeremy Fago, U.S. power and utilities deals leader for PwC.
Three large deals accounted for the growth in deal value in the quarter, including NextEra Energy's $4.3 billion bid to acquire Hawaiian Electric Industries.
In terms of deal type, corporate deals were 72% of deals by value in the fourth quarter, up significantly from last quarter (19%). At 8%, PwC said foreign deals rose slightly from last quarter (5%) while alternative deals represented 28% of deals by value, close to the same proportion as last quarter (26%).
"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," Fago said.
Comparing the fourth quarter of 2014 to the same period a year before, PwC said the number of deals valued at more than $50 million came in at 22, up from the 14 deals from a year before. The total value of the deals grew by 68%, and the average value grew by 7%.
