Canada will be a global energy deal maker

CALGARY AND TORONTO: Despite the recent surge of renewable energy investment in this country, Canada has been left on the outside looking in when it comes to big money mergers and acquisitions, which are at an all-time high in the global renewable energy sector.

Indeed, 2010 saw a total of 321 renewable energy deals internationally, but only 22 per cent of those involved a Canadian company.

But the latest study from Toronto-based advisory firm PricewaterhouseCoopers (PwC) says our market is primed for a boom.

“Our public equity markets are recognized as global centres for equity financing and our government subsidies and support have been trailblazing in North America,” says Carla Eisnor, PwC Deals Partner.

The report identifies six reasons why Canadians will be at the forefront of global energy mergers and acquisitions:

• Aggressive Canadian regulation will spur domestic venture capital and private investment. Government subsidies and sector support provide clarity on economic returns, which spurs investment activity.
• The Canadian sector is ripe for consolidation. Many projects are approaching maturation but junior developers will continue to find it challenging to access project finance, leading to M&A in the sector.
• Corporate social responsibility will prompt investments and mergers to meet corporate demand for clean energy. Across Canada, several major corporations such as Loblaw and IKEA plan to install solar panels on some of their stores. Renewable energy production capacity will have to ramp up to meet this demand.
• Inflation-indexed yields offered by renewable projects will attract institutional capital. Projects subsidized by the Canadian government, which are essentially guaranteed annuities indexed to inflation, will be highly attractive to institutional and pension funds.
• Long-term growth opportunities in the renewable sector will prompt opportunistic buys, particularly from traditional oil and gas players looking to diversify.
• Emerging market growth is an export opportunity for Canadian firms to help meet demand as governments in emerging economies are implementing numerous feed-in-tariff and other subsidy programs.

Download M&A in the Canadian Renewable Energy Sector, which includes graphs and detailed analysis.