The North American electric-power sector remains highly fragmented, with much consolidation potential.
During the last few years, the generating asset-ownership structure in North America has gone through a major change. During one of the most severe bust cycles of the industry, and the gradual recovery of the markets, significant amounts of assets have changed hands.
How private-equity firms may consolidate the utilities industry.
Financial acquirers of utilities face a higher hurdle than traditional acquirers because their reputation for seeking out-sized returns on highly leveraged, short-term investments doesn’t play well. Shaking off that reputation will lead to more effective consolidation.
Is power a public good or a private goodie?
Professor Mark T. Williams goes in depth on the TXU leveraged buyout.
KKR’s leveraged buyout of TXU might be the first of many private-equity M&A deals, but traditional utility mergers also will increase.
Utility mergers and acquisitions took a turn when private-equity firms Kohlberg Kravis Roberts and Texas Pacific Group bid for TXU. Experts from Morgan Stanley, Lazard, and JP Morgan describe the M&A universe.
If private equity makes a killing, Congress should require full disclosure.
There’s just no stopping it. The capital amassed by private takeover firms is simply overwhelming. Any reasonable person could conclude that public utilities face wholesale changes in terms of corporate ownership. Investor-owed? You bet. But the “public” part may well give way to “private.”
Presenting 5 critical factors in realizing merger-related savings.
Booz Allen consultants offer five critical factors in realizing merger-related savings.
Rothschild investment banker Roger Wood explains why those new infrastructure funds are hot on utilities.
He was quite literally the toast of last year’s EEI Finance conference. Using his bank’s diverse resources (Rothschild vineyards in France), he arranged an unforgettable wine tasting that was a big hit with utility executives. Roger Wood, the head of Rothschild’s Power & Utilities Group in North America, is one of the few true white knights on Wall Street. Whereas many banks have developed businesses that can conflict with their utility clients’ interests, Wood says Rothschild’s bankers “live and die by providing long-term independent advice.”
Dominion and AEP want to put the toothpaste back in the tube, but re-regulation could get messy.
Is it possible to go back to the way things were? Nostalgia for the old regulated model seems to be waxing of late, particularly in Virginia. The 70-percent rate increases in Maryland last year at the expiration of price caps—part of the transition to electric competition—has become the calamity that some state regulators fear most. Several utilities are pushing for re-regulation.
Stage-by-stage advice from an M&A veteran.
Company leaders should expect to go through at least one company merger. If you’re in the energy industry, it’s time to begin pre-deal initiatives.
Significant value waits to be unlocked through consolidation, but conventional approaches have been inadequate.
Can consolidation create sustainable long-term value, or will it prove seductive but, ultimately, disappointing to shareholders, employees, customers, and management alike?