Lawyer Monthly Magazine - October 2019 Edition

Investment Vehicles Clean energy is a business opportunity that creates profitable ways of investing in protecting the earth. There are various methods by which an investor can get involved, with options available throughout the stages of the supply chain. Venture Capital & Private Equity Global venture capital and private equity investment reached USD 9.2B in 2018, a 127% increase on the previous year’s figure. However, in 2008 this value was placed at over USD 10B, six times the value seen in 2017. In more recent years, the R&D lies more and more with large manufacturers, hence as the sector matures, the rate of early-stage investment is likely to fall. As the majority of currently used energy technologies are well understood and efficient as they can be, the drive to improve them is principally assumed by large manufacturers with sufficient resources. With the exception of certain boutiques, smaller companies would find it hard in a sector dominated by large manufacturers to both develop and commercialise any particular technology on their own. 2018’s top venture capital deal was a USD 1.1B Series H for View Inc, specialists in the manufacture of smart windows. Other major deals executed in 2018 include a USD 585M investment into Guangzhou Xiaopeng Motors Technology and USD 795M early stage venture capital investment into the Chinese electric vehicle manufacturer, Youxia Motors. Four out of the top five deals executed in the year 2018 were Chinese companies manufacturing smart energy technologies, at a combined total value of USD 2.35B. Mergers & Acquisitions Whilst data for 2018 has yet to be released publicly, acquisition activity in 2017 was valued at USD 114B, a 1% drop seen after seeing four years of growth. USD 87.2B of this was related to the purchase of assets and refinancing deals. Corporate M&A activity, on the other hand, fell in 2017 to USD 14.3B, a 52% decline from the value seen in the previous year. Swimming against the tide, however, was private equity buy-outs which, at USD 11.2B, was four times greater than that seen in the previous year. Considering M&A activity by sector, wind saw a decline of 12% in M&A activity between 2016 and 2017, however, it continues to dominate the renewable energy M&A landscape at USD 62B. Whilst Europe and the United States both saw refinancing deals totalling USD 37.2B and USD 30.8B respectively, the largest gains were in fact made in the developing regions of Brazil (112% increase to USD 6.1B) and India (323% increase to USD 1.3B). Of the USD 62B of M&A activity, wind was dominated by offshore projects in the North Sea with the largest M&A deal made between LM Wind Power Holding and General Electric valued at USD 1.65B in Denmark. 23 of the top 30 M&A deals executed in 2017 were wind related – highlighting its potential over other clean energies to consistently dominate the M&A segment in the years to come. The net effect of this would mean less responsibility (and hence lower energy bills) on the bill-paying consumer to financially support the operation and maintenance of the renewable energy source. 79 OCT 2019 | WWW.LAWYER-MONTHLY.COM Special Feature How Is Clean Energy Investment Performing? 38.9 52.5 75.2 88.3 91.3 123.1 137.8 98.4 70.2 78.5 73.8 77.7 58.4 74.5 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 European Investment UK Investment New Renewable Energy Investment in Europe and the UK New Investments: $B