Energy sector to boost M&A growth in 2014
ENERGY firms are more optimistic about M&A than companies in other sectors, with regulatory changes being the key driver, according to a new report today.
The research from law firm Hogan Lovells shows that 85 per cent of energy sector executives worldwide consider M&A to have delivered what they had hoped for in the past, compared to 75 per cent of executives surveyed across other sectors.
Respondents saw the most opportunities for growth in the upstream oil and gas sector in emerging markets, followed by cross-border energy networks and green energy. Sixty-eight per cent of executives surveyed see the changing regulatory landscape as a key driver for growth of their businesses.
The report cited the example of increased regulatory support for green energy investments in the UK, triggering a flurry of M&A in the power industry in the last two or three years.
“Our research shows that the energy sector will be a driver for the global M&A recovery, with the optimism of executives in the energy sector at a high level,” said Steven Bryan, corporate energy partner at Hogan Lovells.
“Company executives are not only positive about M&A and its past success, but have real confidence about the outlook for the future and the role that M&A can play in driving future growth.”
The research also showed that most energy industry executives expect financing for future deals to come from existing cash and from non-bank lenders over the next two years.
On a global scale, Mergermarket figures cited in the report show that energy deals worth a combined £213bn took place last year, the lowest annual total since 2009. The US was the biggest contributor to that total, providing £75bn worth of deals, followed by Europe with £51bn.