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Power and utility deals drop to lowest quarterly level since 2012 - EY

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LONDON (Reuters) – Merger and acquisition (M&A) deals involving global power and utility companies fell to their lowest quarterly level since 2012 in the first three months of 2019, Ernst & Young (EY) said on Thursday.

The total value of global deals in the sector was $20.6 billion (£15.84 billion) in the first quarter, down almost 80 percent from a record high of $97 billion (£74.59 billion) in the same January to March period of 2018, EY said in a report.

The risk of an economic slowdown had hurt activity, it said, adding most transactions were in renewable energy, with deals worth $12.7 billion accounting for 61 percent of the total.

“The outlook for renewable energy transactions looks very positive because we expect the clean energy market to continue to expand and attract investment from a variety of stakeholders,” said Miles Huq, the leader for global transaction advisory services power and utilities at EY.

Governments continue to put pressure on investment in fossil fuels. Germany aims to close its 84 coal-fired power plants by 2038, while Norway has proposed phasing out investments in oil and gas exploration firms from its $1 trillion sovereign wealth fund.

The Americas was the largest region for power and utility deals, accounting for deals valued at $9.1 billion, but this was 35 percent lower than the fourth quarter of 2018.

The value of Chinese deals fell 45 percent lower compared with the fourth quarter, reaching $4.1 billion, while the value of deals in Europe fell 27 percent to $6.8 billion compared to the last three months of 2018.

(Reporting by Nina Chestney; Editing by Edmund Blair)

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