Renewable energy Iooks set to be the most active sector in the East of England for mergers and acquisitions (M&A), a new report from accountants PKF reveals.
The sector offers substantial opportunities for investment, Norwich-based PKF director Stephen Reed says in the eighth edition of Deal Drivers UK, published today (18-5-11) by PKF in association with M&A intelligence service mergermarket.
“On the funding side we’re seeing a lot of activity in the renewables sector – offshore and onshore wind, wave and solar energy production”, said Mr Reed. “Not a week goes by where renewable opportunities aren’t in the headlines.
“A lot of renewable energy businesses are represented on the East Coast, which creates substantial opportunities for investing in renewable technologies.”
He said other key sectors in the region likely to experience M&A activity were leisure and tourism, where he expected to see the consolidation of some businesses, and manufacturing and engineering, in particular among companies seeking to establish overseas markets for their products.
“In some cases, you’ll find banks positively encouraging businesses to set up or expand international or exporting operations. With the currency position as it is, there are certainly still some good opportunities out there, which I expect might drive expansion plans,” said Mr Reed.
Deal Drivers UK - a comprehensive view of the UK M&A landscape published by PKF in association with mergermarket - says the national market showed signs of rebounding, with deal value in the first three months of 2011 increasing by 63% compared with the equivalent period last year.
It reveals that deals worth £23.2bn were completed in Q1 2011 compared with £14.2bn of deals completed in Q1 2010.
The report concludes that the momentum generated by the strong start to the year, a return to larger deals and increased private equity activity point to this upward trend continuing through the remainder of 2011, despite the challenging funding environment facing many businesses.
In addition, the report found that:
• Larger deals appear to be returning to the market: average deal size in Q1 2011 was around £105m, compared with £66m in the same period last year.
• The number of deals has now exceeded 200 every quarter since Q1 2010; this is in sharp contrast to 2009, when quarterly deal volume peaked at 169.
• Energy and financial services were the most active sectors, representing 34% and 16% of aggregate deal value respectively.
• Within the energy sector, renewable and cleantech are expected to be particularly active segments for M&A in the wake of heightened concerns over nuclear energy following the Fukushima disaster.
• Private equity buyouts and exits have increased in value by almost 38% to £6.2bn in Q1 2011 from £4.5bn in Q1 2010.
• The funding environment continues to be a top concern for UK businesses, particularly in the mid-market.
