Experts predict that 2025 will be a boom year for mergers and acquisitions (M&A) in the US energy industry.
Experts predict 2025 will be a boom year for mergers and acquisitions (M&A) in the US energy industry, driven by increased demand for asset acquisitions as well as the need to meet the electricity needs of data centers supporting artificial intelligence (AI).
Great opportunities in the energy sector.
Record electricity demand, coupled with forecasts of rapid growth in AI-powered electricity consumption, has made power generation infrastructure and the companies that own it attractive to energy corporations, private equity funds, and other institutional investors.
According to numerous sources in the energy and financial industries, including many delegates attending the annual CERAWeek energy conference in Houston, the strongest growth in generations has fueled a surge in trading activity in the early months of this year.
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| 2025 is predicted to be a boom year for M&A activity in the US energy industry. (Illustrative image) |
In January and February, there were 27 M&A deals in the US energy sector totaling $36.4 billion, notably the $16.4 billion acquisition of Calpine by Constellation Energy. According to LSEG data, both in value and number, this figure surpassed all but one year in the past two decades.
US President Donald Trump has declared an energy emergency to boost the expansion of the industry, calling it "an urgent and critical priority for America's national security and economy ."
Kathleen Lawler, CEO of KKR, believes that opportunities in the energy sector are vast and spread across many areas.
In January, KKR and Canada's PSP Pension Fund agreed to acquire a 20% stake in American Electric Power's transmission network for $2.8 billion.
Increased demand and its impact on the market.
The sharp rise in energy company share prices has enabled them to execute larger deals, using shares to finance M&A transactions. Even as the stock market has declined in recent days, independent power producers like Vistra, Constellation, and NRG Energy are still trading at levels 82% to 220% higher than at the beginning of 2024.
Investors also became more confident after Constellation announced the Calpine acquisition. Constellation's share price rose 25% on the day the deal was announced. This is unusual, as the buyer's share price typically falls when they use shares to finance an M&A transaction.
Private equity funds, pension funds, and infrastructure funds have raised massive amounts of capital for energy investments. According to data from Preqin, total unspent capital for infrastructure investments reached $334 billion by the end of 2024.
This capital could be invested in pioneering companies in new energy technologies or in acquiring businesses that provide services to existing energy infrastructure. David Foley, Global Director of Blackstone Energy Transition Partners, said the booming energy market has created "investment opportunities in equipment manufacturing and essential supply companies."
Additionally, capital can also be used to take listed energy companies private. A prime example is Altus Power, one of the largest owners of commercial-scale solar power plants in the US, which agreed to sell to TPG for $2.2 billion.
Challenges and prospects
The wave of M&A transactions in the energy sector is expected to continue despite market instability, as this will only increase the value of existing assets.
Although the Trump administration may make it easier to get energy projects approved, the supply of critical components remains challenging, such as the potential wait times for natural gas turbines that could extend into the end of this decade.
In addition, uncertainty about whether tax credits for renewable energy will continue to exist is also casting a shadow over the prospects for clean energy development.
Furthermore, the Trump administration's immigration reform plan, which includes deporting millions of undocumented immigrants, could slow the progress of new energy projects due to a shortage of skilled labor.
Overall, despite facing numerous challenges, the surge in M&A deals in the US energy sector is creating significant opportunities for investors, especially in the context of soaring electricity demand driven by AI advancements.
| In January and February of this year, there were 27 M&A deals in the US energy sector totaling $36.4 billion, most notably the $16.4 billion acquisition of Calpine by Constellation Energy. |
Source: https://congthuong.vn/thuong-vu-ma-trong-nganh-nang-luong-my-se-bung-no-378066.html
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