Asia Pacific Power & Renewables Deals Asia Pacific deals by value

Asia Pacific Power & Renewables Deals
2014 first half year review and outlook
October 2014
Asia-Pacific power and renewables deal activity has slowed significantly over the past twelve months. In our last
publication, Power & Renewables Deals –2014 outlook and 2013 review, we highlighted that deal activity in AsiaPacific was predominantly influenced by China’s ‘go-abroad’ strategy (including China State Grid Corporation’s
acquisition of Australian interests held by Singapore Power – US$7.5bn). Deal value for Asia-Pacific targets in H1
2014 was down 59% from H1 2013 as larger transactions seen in that period did not repeat in H1 2014.
Notwithstanding, Asia-Pacific power and renewables deals in the first half of 2014 are characterised by themes
which were evident in the latter half of 2013, most notably:
1.
Improved equity market conditions in Australia which have boosted the IPO market and encouraged ‘scrip-forscrip’ deals. 2013 ended with the announcement of a predominantly scrip takeover of gas distributor Envestra
by APA Group, Australia’s largest transporter of natural gas. However, the offer was overtaken by Hong Kong
conglomerate Cheung Kong Group’s full cash offer for all remaining shares in Envestra. Cheung Kong had
already owned 17.5% of Envestra. This was the largest Asia-Pacific deal in H1 2014 (US$3.8bn).
2. Reduced activity, both outbound and domestic, from China. 44% of deal value came from China in our last
publication, compared to 17% in H1 2014. However, this largely reflected the aforementioned China State Grid
– Singapore Power transaction. Excluding this deal, China activity represented 23% of total deal value in H1
2013, indicating that Chinese appetite for energy deals in 2014 remains relatively strong.
Asia Pacific deals by value
30
25
US$bn
Deal flow: Power & Renewables deals momentum has slowed over the past 12 months
28.1
24.7
19.5
17.3
20
15
11.6
10
5
H1 2012 H2 2012 H1 2013 H2 2013 H1 2014
Gas
Electricity
Renewables
3. Continued asset privatisations in Australia including the sale of the largest state-owned generator, Macquarie
Generation to AGL Energy in June 2014 (US$1.4bn).
4. Renewables deals have significantly slowed in 2014, particularly in Australia where political uncertainty
around renewable energy targets and the carbon tax has tempered deal flow.
H1 2014 Asia Pacific deals by country
Deal outlook: Asset privatisation expected to continue whilst renewables outlook in
Australia is uncertain
The deal outlook varies considerably by sector and by the different countries in the region. Australia accounted
for 50% of Asia Pacific deals in H1 2014 and the environment for deals there remains promising due to
privatisations of state-owned energy assets. In NSW, Delta Electricity’s power stations at Vales Point and
Colongra have been announced to be sold, whilst Western Australia and Queensland are also expected to sell
state-owned generation assets. Divestment of the electricity networks in these states has also been flagged,
although are unlikely to occur before 2015. New Zealand infrastructure investor, Infratil recently announced the
sale of its Australian energy assets including Lumo Energy and some generation capacity, to Snowy Hydro.
Additionally, GDF Suez has indicated an interest to a sell a minority stake in its portfolio. However, the outlook
for power deals in India continues to be uncertain due to the coal shortage and elections in 2014 stalling deal
momentum.
The outlook for renewable energy deal-making in Australia is somewhat clouded by the cessation of the carbon
tax; and the recent review and possible reduction in the 2020 renewable energy targets by the Federal
Government. Recent commentary from key players in the market indicate that any reduction in renewable
targets would adversely impact the industry given investments already made in achieving the existing targets..
In other regions, interest in renewables is expected to be high from Chinese and Japanese investors as well as
financial investors and pension funds. The Chinese government’s policy emphasis on clean energy may also drive
increased renewable deal activity in China.
22%
50%
11%
17%
Australia
China
India
Other
Asia Pacific Power & Renewables Deals
2014 first half year review and outlook
Top 10 Asia Pacific Power & Renewables deals
N.o
Target name
Target nation
Sector
1
2
3
4
5
6
Env estra Ltd (82 .5%) *
Macquarie Generation Ltd
Com panhia de Electricidade de Macau SARL (3 7 .98%)
Masinloc Power Partners Co Ltd - MPPC (40.95%)
Tongy ang Power Inc
DUET Group (1 4.1 %)
Australia
Australia
Macao
Philippines
South Korea
Australia
Gas
Electricity
Electricity
Electricity
Electricity
Gas
7
Qingdao Sky wide Energy Co Ltd
China
Gas
8
9
10
Vadinar Power Co Ltd (7 3 .99%)
CSEC Guohua International Power Co Ltd (3 0%)
Manila Electric Co - Meralco (5%)
India
China
Philippines
Value of
transaction
(US$m)
Electricity
Electricity
Electricity
Sub-t ot al
Other deals
Tot al Asia Pac deal value
3 ,81 5
1 ,3 56
61 2
453
42 2
37 6
3 65
3 49
339
3 02
8,387
3 ,1 63
11,551
Date Acquirer
announced name
8-May -1 4
1 2 -Feb-1 4
1 5-May -1 4
2 6-Jun-1 4
1 8-Jun-1 4
2 0-May -1 4
Cheung Kong Group
AGL Energy Ltd
Nam Kwong (Group) Co Ltd
Electricity Generating Public Com pany Ltd
POSCO Co Ltd
Spark Infrastructure Group
Acquirer nation
Hong Kong
Australia
Macao
Thailand
South Korea
Australia
1 1 -Apr-1 4 Changchun Departm ent Jituan Store Co Ltd China
1 1 -Apr-1 4 Essar Oil Ltd
2 -Apr-1 4 CA Holdings Ltd
2 4-Jun-1 4 Metro Pacific Inv estm ents Corp
India
China
Philippines
* Cheung Kong Group reached 90% share ownership in August 2014 requiring compulsory acquisition of the remaining shares in Envestra
Contacts
Methodology
Asia Pacific Power & Utilities
Deals Leaders
Territory contacts
Jock O’Callaghan
Asia Pacific Energy, Utilities &
Mining Industry Leader
Telephone: +61 3 8603 6137
Email: jock.ocallaghan@au.pwc.com
Andy Welsh
PwC Australia – Deals Power &
Utilities Leader
Telephone: +61 3 8603 2704
Email: andy.welsh@au.pwc.com
Victor Huang
Telephone: +852 2289 2319
Email: victor.wd.huang@hk.pwc.com
Takahiko Inoue
Telephone: +81 90 5326 2229
Email: takahiko.inoue@jp.pwc.com
China
Gavin Chui
Telephone: +86 10 6533 2188
Email: gavin.chui@cn.pwc.com
India
Kameswara Rao
Telephone: +9140 6624 6688
Email: kameswara.rao@in.pwc.com
Asia Pacific Power & Renewables Deals includes analysis of all
global power utilities, renewable energy and clean technology
deal activity. This version focuses on the Asia Pacific market and
deal activity during the first six months of 2014.
The analysis is based on published transactions form the
Dealogic ‘M&A Global database’ for all electricity, gas utility and
renewables deals. It encompasses announced deals, including
those pending financial and legal closure, and those which are
completed. Deal values are the consideration value announced or
reported including any assumption of debt and liabilities.
Comparative data for prior years and quarters may differ to that
appearing in previous editions of our analysis or other current
year deals publications. This can arise in the case of updated
information or methodological refinements and consequent
restatement of the input database.
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