UK energy sector M&A activity rises to £10bn this year despite economic gloom
The UK’s energy and commodities market saw nearly £10bn worth of mergers and acquisitions in the first six months of this year, according to new research from PwC.
The Big Four accountancy firm said there was a total of 86 transactions across the energy, utilities and resources (EUR) industries across the UK, equating to £9.9bn of activity.
In the mid-year update for its Global M&A Industry Trends report, PwC reveals the EUR sector ranks as the third most valuable industry in terms of dealmaking activity – marginally behind technology, media and communications with £10.1bn and financial services with £10.2bn.
There has been a historically elevated level of activity in recent years, with deal values of £31bn and £24bn in 2021 and 2022 across the EUR sector, compared with £9bn, £8.1bn and £12.9bn in the full years of 2018, 2019 and 2020.
Major deals in the UK’s energy sector this year include the acquisition of North Sea producer Neptune by Eni and Var Energi and Macqaurie’s growing stake in National Gas.
“In the UK, total deal values in the recent past are above longer-term historical levels, demonstrating that investors and dealmakers are moving to rebalance portfolios and accelerate the energy transition,” said Drew Stevenson, leader of industry for energy, utilities and resources.
“These findings demonstrate that strategic energy transition and security of supply investment opportunities are dominating the capital flows across markets, and we expect this to continue for the remainder of 2023 and into 2024,” he added.
Lucy Stapleton, head of deals at PwC UK, argued that mid-market deals were continuing, with cash-rich corporates looking for strategic opportunities.
“In spite of the macroeconomic backdrop, dealmakers remain optimistic and there is pent up demand amongst dealmakers who remain poised to deploy capital when market conditions begin to stabilise and valuation gaps narrow,” she said.