North American Power Deals: Mergers & acquisitions report

 

 

Quarterly report: Q2 2017

Canadian investors kept up the momentum in Q2 2017 as they continued to be active in the North American power and utilities deal market. Canadian players were involved in 4 of the top 10 deals (Fortis, Capital Power, Algonquin Power and PSP Investments).

The largest Canadian deal of the quarter was the second largest in North America: Fortis’s US$878 million (CA$1.2 billion) acquisition of a two-thirds interest in Teck’s Waneta hydroelectric generating station. The deal included signing a 20-year power purchase agreement to power Teck’s nearby industrial operations.

 

 

Across North America, in Q2 2017, while a decline in total deal value from Q1 2017 and Q2 2016 was shown, consistent themes continued to resonate as deal makers sought infrastructure transactions and yield. This was highlighted in the largest deal of the quarter: a water utility transaction. Inbound interest, particularly from Canadian investors, as well as continued strong renewable activity were also highlighted in Q2 2017.

Like in the first quarter of this year, strategic deals continued to generate the largest share of deal value, with US$4.4 billion, or 68% of total deal value. Consolidation has been a key industry trend in recent years, and so small- and mid-cap utilities remain potential acquisition targets.

 

 

 

 

Key trends this quarter

Deal volume in Q2 2017 increased compared with Q2 2016 and Q1 2017. However, total deal value decreased to $6.5 billion, down 77 percent from $28.3 billion in Q2 2016 and 49 percent from $12.8 billion in Q1 2017.

Only one mega deal occurred in Q2 2017, as compared with four mega deals in Q2 2016 and two in Q1 2017.

Deal activity continued to be driven by Strategic deals in Q2 2017, accounting for 68 percent of deal value, down from 84 percent in Q1 2017 and from 76 percent in Q2 2016.

Despite the equal share in deal volume of Asset deals, Corporate deals dominated deal value contributing 64 percent to total deal value in the quarter.

Non-hydro renewable deals accounted for half of deal volume and 44 percent of deal value at $2.9 billion in Q2 2017.

There were seven inbound deals in Q2 2017, representing a significant number of inbound deals compared to two in Q1 2017 and three in Q2 2016.

 

 

Contact us

Ken Goodwin
Partner, National Valuations, Modelling and Disputes Leader
Tel: +1 416 814 5760
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John Matheson
Partner, Deals - Transaction Services
Tel: +1 416 687 8171
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Jeffrey Stewart
Partner, Valuations, Forensics & Disputes
Tel: +1 416 941 8361
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Brian Poth
Partner, National Industry Leader, Power and Utilities
Tel: +1 416 687 8522
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