🏦 Private Equity (PE) investment powerhouses Global Infrastructure Partners (GIP) Partners and Canada Pension Plan Investment Board’s CPP Investments | Investissements RPC acquired 100% of Allete for an enterprise value of $6.2bn
đź’° Enerdatics calculates the EV/Revenue multiple of the deal at 3.3X, rendering this purchase as one of the most value accretive utility-focussed acquisitions in the US, since the start of 2022
⚡ Enerdatics believes that during 2024-25, utility-centric investments in the US will be valued between 3-6X of last-twelve-months (LTM) revenue, which is significantly lower than the EV/Revenue multiples observed for takeovers and investments in renewables developers over the past two years, such as:
- TransAlta Corp’s acquisition of TransAlta Renewables | Dec’23 | EV/Revenue: 9X
- GIC committing $1bn to EDP Renewables | Mar’23 | EV/Revenue: 10X
- ROTH Acquisition acquires solar PV developer Tigo | Dec’22 | EV/Revenue: 9X
- XL Fleet acquires residential solar firm Spruce Power | Sep’22 | EV/Revenue: 7X
🌞 Over the next 18 months, Enerdatics forecasts that this discount in valuations will continue spurring investor interest in North American utilities, driven by:
- Buyers, led by PE firms and other large-cap companies, that seek to deploy billions of dollars of available capital into platforms with earnings from stable, conventional power generation assets, coupled with GWs of long-term potential from renewables development pipelines
- Leveraged utilities as sellers, that aim to rationalize their portfolios and improve credit ratings by divesting non-core operations and raising equity capital to trim debt
The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.
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