May 2010 summary: Wind and Hydro sparkle in alternative energy

The alternative energy industry witnessed a marginal decrease in the number of deals, but a huge increase in deal value in May 2010. The market reported 212 deals worth US$39.2 billion in May 2010 compared to 219 deals worth US$27.4 billion in April 2010 - an increase of 43% in terms of deal value and a marginal decrease of around 3% in terms of the number of deals.

The wind and hydro markets registered an increase in the number of deals - reporting 68 and 37 deals respectively in May 2010 - compared to 59 and 29 deals in April 2010.

Conversely, deals in the solar and biopower sectors decreased from 78 and 47 deals respectively in April 2010 to 59 and 40 deals in May 2010.

Asset financing lead the funding pack, reporting 57% of the total number of deals in May 2010. This was primarily driven by supportive policies, as well as an investor base which is comfortable with financing alternative energy projects. In second place, debt offering transactions contributed 14% of the total number of deals, followed by equity offering and M&A deals with 8% in May 2010.

In terms of geography, North America and the Asia-Pacific witnessed a decrease in the number of deals in May 2010 as compared to April 2010. North America and the Asia-Pacific recorded a decrease of around 15% and 4% respectively in May 2010, compared to 86 and 47 deals respectively in April 2010.

Credit Suisse Group AG ranked as the top financial advisor, providing advisory services for four M&A deals worth around US$5 billion between December 2009 and May 2010. However, in terms of deal value, Morgan Stanley emerged as the top financial advisor for the M&A segment between December 2009 and May 2010. The advisory firm acted as the advisor for two deals worth US$8.5 billion during the same period.

Top deals

State Grid Corporation of China announced it was to invest CNY43.4 billion (US$6.3 billion) for the construction and development of Xiangjiaba hydropower project located on the Jinshajiang River, on the border between Yibin County and Shuifu County in Yunnan Province, China. The total installed capacity of the project will be 6,000 Megawatts (MW). The project is expected to start its commercial operations by 2012;

Datang International Power Generation Co., Ltd., a power generation company, agreed to issue up to a maximum of 1 billion shares of its common stock at a price not less than CNY6.81 per share (US$0.997 per share) for gross proceeds of CNY6.8 billion (US$997.3 million), in a private placement. The company estimates that the proposed proceeds from the offering shall not exceed CNY8 billion (US$1.2 billion). The proceeds from the offering will fund the construction of 8 projects, including the Chongqing Wujiang Yinpan hydropower station; the Liaoning Datang International Fuxin Qianchatai windpower project; the Liaoning Datang International Fuxin Houchatai windpower project; and the Inner Mongolia Datang International Chayouhouqi Hongmu windpower mill phase 2 project;

CU Inc., a wholly-owned subsidiary of Canadian Utilities Limited, filed a preliminary base shelf prospectus with the securities commissions to issue up to CAD1.7 billion (US$1.6 billion) of debentures in tranches as required over the next 25 months. The company intends to use the proceeds from the offering to fund utility capital expenditures, to repay existing indebtedness and for other general corporate purposes. The company owns assets of approximately CAD6.7 billion (US$6.5 billion).

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.

Comment on this blog