Renewables sector to see more deals
The US renewables industry will see “a lot more take-private transactions in the next 12 months”, according to a projection from Britta von Oesen, a partner in investment bank CRC-IB, a panellist at Norton Rose Fulbright’s annual energy finance conference held this summer in San Diego. The transactions are expected as renewables companies “refocus on private capital that understands their business”, von Oesen said.
Himanshu Saxena, chief executive officer of Lotus Infrastructure Partners, provided insight on his firm’s experience with M&A amid renewable energy headwinds, adding that a portfolio of gas plants recently attracted 60 interested parties while a contracted solar project brought in only 30.
“This would have been completely the opposite three years ago,” Saxena said. "There are significantly more buyers now trying to balance their portfolios. A lot of companies that have historically only done renewables are now looking at buying gas plants.”
Saxena said that for renewables projects already in operation the cost of capital has risen significantly.
“You can argue whether that is related to the 10-year Treasuries or risk-free cost of capital, but the cost of equity has gone up from 7%, 8% or 9% to something in the low double digits," he said. "Buyers will show up to buy operating renewables assets, but the prices will be significantly lower today than you would have gotten three years ago.”
