10 key trends in transition M&A
New technology providers and specialist operators entering projects earlier
Parties should anticipate the path to final investment decision and project commissioning, ensuring appropriate off-ramps.
Co-venturers can leverage the technical capabilities of one partner to deliver a much more effective outcome than would be possible for either of them individually.
Philip Morgan
Freshfields Partner and head of the firm’s energy and natural resources practice in Asia
M&A during the early stages of a venture – whether at the individual project level or at the corporate level – enables smaller and/or more niche market participants to have a magnified impact, says Philip Morgan, Freshfields Partner and head of the firm’s energy and natural resources practice in Asia.
'Co-venturers can leverage the technical capabilities of one partner to deliver a much more effective outcome than would be possible for either of them individually, and M&A which supports increased vertical integration enables these smaller entities to be involved across the value chain at an earlier point in a project or business lifecycle, with greater impact.'
Where specialist operators and/or technology providers have partnered with major industry players or project developers, each party will need to carefully anticipate the path towards FID (final investment decision) and project commissioning and ensure that there are appropriate off-ramps at the right time (or potentially carry or other structured funding arrangements in place) if the equity funding requirements of the project are likely to exceed the capabilities of any of its participants. (Our recent post on considerations for 'green hydrogen' projects includes some of our insights on JV/M&A activity in the low-carbon hydrogen sector.)
Transformational M&A 10 key trends
- 01. Increased vertical and horizontal integration
- 02. Bundling small projects from SME developers into portfolios to create scale
- 03. Traditional players moving outside of their comfort zones
- 04. New technology providers and specialist operators entering projects earlier
- 05. Geography is critical for many low-carbon technologies
- 06. No business is an island: low-carbon investment requires a full value chain
- 07. Setting up businesses/projects to facilitate M&A and realise synergies in future is critical
- 08. Sources of capital driving M&A activity (and their constraints) are changing
- 09. Private capital trends are affecting energy transition M&A
- 10. Antitrust and FDI controls are influencing energy transition M&A
- Outlook for transition M&A
Key contacts
James Chapman Partner
London
Philip Morgan Partner
Singapore
Samira Afrasiabi Partner
London
Alon Gordon Partner
London
Richard Thexton Partner
London
Graham Watson Partner
London
Bukunola Alakija Counsel
London
Laurent Bougard Counsel
Hong Kong
Sarah Jensen Counsel
London
