April 2010 summary: decreased deal activity

The alternative energy industry witnessed a decrease in the number of deals and deal value in April 2010. The market reported 194 deals worth US$24.4 billion in April 2010, compared to 240 deals worth US$24.9 billion in March 2010.

This was a decrease of 19% in terms of the number of deals, and a marginal decrease of around 2% in terms of deal value.

The solar, wind, biopower, hydro and energy efficiency markets registered a decrease in the number of deals - reporting 65, 54, 41, 25, and 13 deals respectively in April 2010, compared to 67, 64, 49, 33, and 20 deals in March 2010.

Asset financing, including project and tax equity financing, bond and lease financing and self-funded projects, accounted for 51% of the total deals in April 2010. This was primarily driven by supportive policies, as well as an investor base which is comfortable in financing alternative energy projects.

PE/VC transactions contributed 15% of the total number of deals, followed by M&A deals with 13% in April 2010. Mergers and Acquisitions (M&As) in the alternative energy market witnessed a decrease in the number of deals, reporting 26 deals in April 2010 compared to 31 deals in March 2010. However, deal value increased sharply from US$528.8 million in March 2010 to US$2 billion in April 2010.

In terms of geography, North America, Europe and the Asia-Pacific region witnessed a decrease in the number of deals in April 2010 compared to March 2010. North America, Europe and the Asia-Pacific recorded a decrease of around 15%, 18%, and 21% respectively in April 2010, compared to 102, 60, and 53 deals respectively in March 2010.

Deutsche Bank AG ranked as the top financial advisor by providing advisory services for four M&A deals worth US$3.5 billion between November 2009 and April 2010. However, in terms of deal value, Morgan Stanley emerged as the top financial advisor for the M&A segment between November 2009 and April 2010. The advisory firm acted as the advisor for three deals worth US$8.5 billion during the same period.

Top deals

• The Board of Airport Commissioners of Los Angeles announced that it was to invest US$3 billion for the construction and development of a solar power plant located in the region of Palmdale, Los Angeles, California, USA. The project will have a total installed capacity of between 1,000 to 2,200 MW. The board is seeking a firm for the construction of the project. The project is expected to start construction by 2011;
• Petroleo Brasileiro S.A. (Petrobras), an energy company, agreed to invest in Acucar Guarani S.A. (Guarani), an ethanol company and a subsidiary of Tereos Group. The transaction is valued at BRL1.6 billion (US$920.8 million) or at BRL5.83 per share (US$3.36 per share). Under the terms, Petrobras through its wholly-owned subsidiary Petrobras Biocombustivel SA will acquire a 45.7% stake in Guarani. The company will initially invest BRL682 million (US$392.5 million) through a capital increase in Cruz Alta Participacoes S.A., a company controlled by Guarani. The acquisition enables Petrobras and Guarani to accelerate their growth in sugarcane processing, ethanol production and energy cogeneration, as well as jointly develop technology and research and development (R&D) programs for new generation bio-fuels in the Brazilian industry.
• Nobao Renewable Energy Holdings Ltd, a renewable energy company, filed a preliminary prospectus with the US Securities and Exchange Commission, for an Initial Public Offering (IPO) of 73.2 million American depositary shares of its common stock at a price of US$4.1 per share for gross proceeds of US$300 million. The company intends to list its shares on the New York Stock Exchange under the symbol "NRE". Nobao intends to use the proceeds from the offering to expand its business under the EMC model; to fund the expansion of the production capacity of its manufacturing facilities; and for general corporate purposes and for the potential acquisitions of, or investments in, complementary service businesses.

GlobalData is an industry analysis specialist company providing business information products and services. This article is a snapshot taken from GlobalData's regular Alternative Energy Deals Analysis tracker report.

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