The COVID-19 global pandemic continued to impact M&A activity in the Power & Utilities (“P&U”) sector in the last twelve months (LTM) through November 15, 2020, with overall decline in deal volume compared to 2019 (41 deals in LTM vs 52 deals in 2019). However, on a deal value basis, total deal value increased from $42.9 billion in 2019 to $48.1 billion in LTM. While the first half of 2020 saw sizable reductions in deal value at $13.3 billion, megadeals returned in the second half of the year driving an incremental $31.6 billion in deal value from June 30 through November 15. The industry experienced growth in both deal volume and value during this time period due to megadeals such as the Dominion Energy Natural Gas Transportation and Storage / Berkshire Hathaway and PNM Resources / Avangrid deals.
PwC's Deals Sector Leader John Potter discusses the trends driving deals and outlook for 2021.
PwC's Deals Sector Leader John Potter discusses the trends driving deals and outlook for 2021. Explore national deals trends
With the onset of the COVID-19 global pandemic in 2020, M&A activity in the P&U sector saw initial reductions in both deal volumes and total deal value; however, deal value rebounded in the second half of the year. While various factors impacted the deal market in LTM, including the broad impacts of the pandemic, dealmakers found ways to strategically approach the deals market. Additionally, deal activity in the second part of the year underscored how companies are prioritizing environmental, social and governance (“ESG”) initiatives.
As we progress into 2021, we expect pandemic related uncertainty to continue to impact the deal market; however, we also expect opportunistic M&A activity to continue as industry participants look to rebalance and rationalize portfolios and deploy capital into attractive growth and yielding investments, such as we saw in the second part of 2020. Additionally, as seen in LTM, we expect renewables and ESG initiatives to continue to drive investment thesis and deal activity in the sector.
Rank - #1 Value ($ billion) - $8.3 |
Rank - #2 Value ($ billion) - $8.0 |
Rank - #3 Value ($ billion) - $7.7 |
Rank - #4 Value ($ billion) - $3.6 |
Rank - #5 Value ($ billion) - $3.5 |
Rank - #6 Value ($ billion) - $3.3 |
Rank - #7 Value ($ billion) - $1.2 |
Rank - #8 Value ($ billion) - $1.1 |
Rank - #9 Value ($ billion) - $1.0 |
Rank - #10 Value ($ billion) - $0.9 |
“We saw a significant uptick in deal value starting in the second half of 2020 as ESG priorities created opportunities to re-evaluate portfolios and redeploy capital. We expect investor sentiment to drive activity while dealmakers balance ESG goals against still present infrastructure needs to support those goals.”