Global Cleantech Sector Report 2012 www.mergers-alliance.com Sector Report 2012 Contents Report 2 Introduction 3 Report Highlights 4 Country Highlights 6 Deal Focus by Country Americas Brazil 8 Mexico 10 USA 12 Asia, Africa and Middle East China 14 India 16 Japan 18 South Africa 20 Turkey 22 Europe France 24 Germany 26 Italy 28 The Netherlands 30 Poland 32 Russia 34 Scandinavia 36 Spain 38 United Kingdom 40 Contacts 43 Transactions 44 Sector Report 2012 Report About the report This sector report was edited by Andre Johnston For more information on this report please of the Mergers Alliance central team. To compile contact Andre Johnston, Mergers Alliance our findings we conducted interviews with our Research Manager. sector experts from each member firm within the Mergers Alliance partnership. We also surveyed Andre Johnston owners and senior executives within cleantech Mergers Alliance sector organisations and private equity investors +44 207 881 2967 worldwide. [email protected] Deal Focus Within each country’s Deal Focus we review Additionally, we provide an overview of the merger and acquisition (M&A) activity, focusing cleantech sector as a whole, highlighting the on key deals and trends within the cleantech market structure as well as commenting on the sector. Cleantech is a shortened form of clean key trends and the factors influencing M&A. We technologies. We define cleantech as those provide our own insight on how we think the activities relating to renewable power generation: market might play out over the coming 18 Wind farms, solar, hydro, waste to energy, months and attempt to identify key investment geothermal, biogas, biomass and tidal. Our opportunities. We also provide a summary of report also includes transactions relating to two government policies from each country energy efficiency and resource management: that we believe has, or will, influence M&A Recycling, air & environment management, activity in cleantech. energy infrastructure, water treatment / conservation. We have included tables of Key terminology: PV (Photovoltaic), GW recent transactions where the target company (Gigawatt), MW (Megawatt), KW (Kilowatt), is located in the country under review. Mwh (Megawatt hour), kWh (Kilowatt hour) Disclaimer This publication contains general information and is not intended reasonable effort has been made to ensure the accuracy of to be comprehensive nor to provide financial, investment, legal, the information contained in this publication, this cannot be tax or other professional advice or services. This publication is guaranteed and neither Mergers Alliance nor any of its member not a substitute for such professional advice or services, and it firms or other related entity shall have any liability to any person should not be acted on or relied upon or used as a basis for any or entity which relies on the information contained in this investment or other decision or action that may affect you or publication, including incidental or consequential damages your business. Before taking any such decision you should arising from errors of omissions. Any such reliance is solely consult a suitably qualified professional adviser. Whilst at the user’s risk. 2 Sector Report 2012 Introduction Whilst the major economies of the world continue to navigate a difficult credit environment and weaker growth prospects, the cleantech industry remains somewhat unique in that it continues to develop strongly in almost all countries. As you will see from our sector experts across the world whilst each country may be at different points in their development trajectory, prospects in almost all are compelling. This development is being driven by the need As the global recovery takes hold, we at Mergers for governments to tackle climate change on a Alliance are ideally placed to help you. Whether multi-lateral basis and ensure security of energy you seek growth through acquisition, wish to supply for their populations and industries over restructure or realise value in your business, the long term. Legislation and attractive fiscal our international advisors are in a unique position incentives are key to much of the recent growth to help you. Our member firms have a prominent and in most countries these levers will drive position in boardrooms across the world and are investment for decades to come. renowned for delivering award winning partner- led advisory service with seamless international You will find in our report a great deal of cooperation. market-leading insight into the key issues facing the sector in 2011 and beyond: how We hope you enjoy reading our report and the industry needs to operate on a global basis, welcome any thoughts or additions you might why geographical comparative strengths are like to contribute. focusing investment in each country and how broad state initiatives and targets are ensuring that transactions get done. Our work also highlights the key developments in different cleantech sectors and how this is shaping the M&A strategies of mid-cap companies, global corporates and the private equity industry alike. Andy Currie Chairman of Mergers Alliance Managing Partner of Catalyst Corporate Finance LLP + 44 207 881 2960 [email protected] 3 Sector Report 2012 Report Highlights We at Mergers Alliance believe the main factors to shape M&A in the cleantech sector over the next three years will be: The “globality” of cleantech Government targets impacting cleantech The deployment of technology and capital (both corporate and institutional) in cleantech has had a Renewable targets are driving cleantech sector distinctly international flavour since the industry’s development. One of the more sweeping initiatives is the inception. Nonetheless, there has been a slight EU’s 20-20-20 directive. It mandates a change in energy reduction in cross-border activity over the past 18 consumption and efficiency habits and for renewables to months which can be largely attributed to ongoing constitute 20% of energy generation by 2020. China’s global economic concerns and contracting government Renewable Energy Law aims for 15% renewable energy support. This trend should reverse as balance sheets usage by 2020. South Africa, whose domestic cleantech strengthen and as investors start looking for targets in industry is currently almost nonexistent, is targeting an developing economies with strong macro fundamentals ambitious 37% by 2030. Such initiatives will underpin and robust support mechanisms. We expect interest to investment decisions and help ensure deals get stretch beyond the BRIC countries to include nascent completed, even in the face of global economic cleantech markets with high-growth potential such as uncertainty. South Africa and Poland. Specific policies having direct Countries to capitalise on their affect on M&A comparative advantage Certain legislative and fiscal policies are directly affecting Each country will capitalise on their comparative natural the volume of M&A transactions. The National Biodiesel strengths; the UK with offshore wind, South Africa with Program in Brazil, which mandates a 5% biodiesel blend solar, Sweden with biomass. Equally, countries such as in diesel, has triggered a number of deals, the recently the Netherlands with its water industry and Germany and implemented feed-in-tariffs in the UK was the catalyst Japan with their manufacturing capabilities will be looking behind some of the most notable transactions in the to entrench and further develop their respective UK. Conversely, regressive policies have also been the competitive advantages. driving force behind a string of deals; the reductions in photovoltaic subsidies in Italy being a good case in point. Scope of private equity interest broad We should see a new round of incentives, particularly from countries with healthy current account surpluses, Unlike in many industries, private equity investors have as they attempt to emerge from the renewables arms been involved across the whole financing cycle from pre- race endowed with a healthy green portfolio. revenue venture finance, through traditional MBO’s, to investing into large-scale generating assets. It should be noted that there was a slight increase in investments into The impact of Fukushima more mature businesses which have clearer paths to exit. The nuclear renaissance has seemingly slowed as a result Our research shows that PE/VC investment in 2010 of the Great East Japan earthquake creating conditions increased by 19% compared to 2009 and 2011 is set to for the meltdown of nuclear reactors in Fukushima. It is achieve similar growth numbers. We expect this number clear now that Fukushima has had a substantive effect to continue to increase over the coming years due to the on the policies of both governments and energy emergence of a growing number of specialist PE funds conglomerates. The biggest news was arguably that focus exclusively on cleantech. Interestingly within Germany’s decision to shut down all of its nuclear power PE circles, the definition of cleantech has been plants by 2022. Just weeks after the Japan earthquake broadened to include sectors such as water, waste nuclear energy giant EDF bought out the remaining management and industrial process efficiency. shares it does not already own of its renewable energy 4 subsidiary EDF Energies Nouvelles; a possible indication that the disaster is influencing corporate decision making. Chinese wind turbine firms are emerging to become Sector focus highly competitive across the globe