M&As Increased, while Investments Decreased in Nuclear Energy Market in Q4 2012

Wednesday 6 March 2013, Amsterdam

Nuclear Energy Quarterly Deals Analysis: M&A and Investment Trends – Q4 2012” report is an essential source of data and trend analysis on mergers and acquisitions (M&As) and financing in the nuclear energy market. The report provides detailed information on M&As, equity and debt offerings, private equity and venture capital (PE/VC) and partnership transactions recorded in the nuclear energy industry in Q4 2012. The report discloses detailed comparative data on the number of deals and their value in the past five quarters, categorized into deal types, segments and geographies. The report also offers information on the top advisory firms in the nuclear energy industry.

M&A Activity Increased in Nuclear Energy Market in Q4 2012

M&As and asset transactions, which include changes in the ownership and control of companies or assets We doe not consider this value as a new investment in the market), in the nuclear energy industry recorded an increase of 57% in the number of deals from 16 in Q3 2012 to 25 in Q4 2012. The increase was a result of higher deal activity in North America with 11 deals in Q4 2012. However, deal value registered a decrease of 12% with $4.6 billion in Q4 2012, as compared to $5.2 billion in Q3 2012.  The industry registered two high-value deals of more than $1 billion each in Q4 2012, which accounted for 87% of the total deal value in the quarter. North America accounted for 44% of the M&A deals in the nuclear energy market with 11 deals in Q4 2012, up 43% over the previous quarter’s seven deals. Asia-Pacific recorded a decrease with five deals in Q4 2012, down 29% from seven deals in Q3 2012. The uranium mining & processing sector registered 20 deals worth $629.9m in Q4 2012, as compared to 11 deals worth $462.8m in Q3 2012. Epangelo Mining’s agreement to acquire 10% stake in Swakop Uranium, an uranium exploration company, for $209.5m; the agreement of Denison Mines to acquire JNR Resources for $10m; and Ibhubesi Capital’s proposed acquisition of 67% interest in Mangalisa Project from Superior Mining International for $7.5m were some of the high-value asset transactions recorded in the uranium mining & processing sector in Q4 2012.

According to Prabhanjan Kumar Singh, “the increased number of M&As and asset transactions may not be indicative of bidders confidence in nuclear power. It is worth noting that the total M&A value has registered a decrease of 12% with $4.6 billion in Q4 2012, as compared to $5.2 billion in Q3 2012. NTPC is likely to keep its focus on thermal power as its interest to setup 2X700 MW reactors in a joint venture with NPCIL has diluted considering the uncertainty about nuclear future. The acquisition of 20% stake from Shaw Group Inc. will increase Toshiba’s ownership in Westinghouse Electric to 87% making it easier for Toshiba to select nuclear projects on case to case basis. Barring two high value deals of over $1 billion each the remaining deals have contributed to just 13% with $ 0.6 billion. This reflects bidders’ concerns in conducting any major asset transaction deals considering the criticalities involved in defining the scope of activities and gauge the return on Investment in nuclear industry.”

New Investments Decreased in Nuclear Energy Industry in Q4 2012

Investments in nuclear energy companies, including new investments through equity/debt offerings and financings by PE/VC firms, recorded a decrease of 32% in deal value with $21 billion in Q4 2012, as compared to $30.6 billion in Q3 2012. However, the number of investments increased 19% from 113 deals in Q3 2012 to 134 deals in Q4 2012.

The majority of investments were in the form of debt, which reached $20.1 billion in Q4 2012, accounting for 96% of new investments in the nulear energy industry. Capital raising, through debt offerings, by companies in Europe registered a considerable decrease in the number of deals and deal values, with six deals worth $6.2 billion in Q4 2012, as compared to 13 deals worth $12.8 billion in Q3 2012. Global equity offerings, including initial public offerings (IPOs), secondary offerings, and private investment in public equities (PIPEs), registered a decrease of 43% in deal value from $1.6 billion in Q3 2012 to $932.5m in Q4 2012. However, the number of deals recorded a substantial increase of 46% from 71 in Q3 2012 to 104 in Q4 2012. Higher activity in Asia-Pacific and North America led to the increase with 58 and 41 deals respectively.

According to Prabhanjan Kumar Singh, “the decreased investments in Q4 can be attributed to high investment in Q3 which had registered an increase of 68% as compared to Q2. The new investment has witnessed a decrease of 32%, on the contrary, in terms of number of deals, a substantial increase of 46% has been registered as compared to the previous quarter which indicates indecisiveness of big investors to pursue nuclear power as a profitable sector due to market uncertainties.”

Decreased Financing through Debt & Equity Offerings in Q4 2012

Global debt offerings, including public and private debt placements, by nuclear energy companies registered a decrease of 30% in deal value with $20.1 billion in Q4 2012, as compared to $28.9 billion in Q3 2012. The number of deals also registered a decrease of 31% from 42 deals in Q3 2012 to 29 in Q4 2012. The decrease in the number of deals and deal value was driven by some of the large companies such as BHP Billiton, which made four debt offerings for aggregate gross proceeds of $5.5 billion; Rio Tinto’s three debt offerings for aggregate gross proceeds of $3 billion; and Electricite de France’s one debt offering for gross proceeds of $2.5 billion, which together led to a substantial increase in the number of deals and deal value in Q3 2012. Public debt offerings registered a decrease in the number of deals and deal value with 23 deals worth $18.9 billion in Q4 2012, as compared to 33 deals worth $24.2 billion in Q3 2012, while private debt placements also registered a decrease in the number of deals and deal value with six deals worth $1.2 billion in Q4 2012, as compared to nine deals worth $4.7 billion in Q3 2012.

Global equity offerings, including initial public offerings (IPOs), secondary offerings, and private investment in public equities (PIPEs), registered a decrease of 43% in deal value from $1.6 billion in Q3 2012 to $932.5m in Q4 2012. The large difference was due to some of the high-value deals such as Transmissora Alianca de Energia Eletrica’s IPO for $875.4m and NextEra Energy’s filing of prospectus for public offering of units for $650m recorded in Q3 2012. However, the number of deals recorded a substantial increase of 46% from 71 in Q3 2012 to 104 in Q4 2012. Secondary offerings registered an increase in number and a substantial decrease in deal value with 21 deals worth $154.7m in Q4 2012, as compared to 16 deals worth $692.1m in Q3 2012.

Investments Fall Substantially in Europe and Asia-Pacific in Q4 2012

Europe and Asia-Pacific recorded a substantial decrease in deal values with $6.7 billion and $4.4 billion in Q4 2012, as compared to $12.9 billion and $8.4 billion respectively in Q3 2012. The number of deals in Europe declined from 19 in Q3 2012 to 15 in Q4 2012, while deals in Asia-Pacific increased 19% from 59 deals in Q3 2012 to 70 deals in Q4 2012. Australia recorded considerable nuclear power activity in the Asia-Pacific region, accounting for 91% of the number of deals with 64 deals in Q4 2012.

North America registered a substantial increase of 46% in the number of deals and a marginal increase of 5% in deal value with 73 deals worth $14.3 billion in Q4 2012, as compared to 50 deals worth $13.6 billion in Q3 2012. Canada recorded considerable nuclear power activity in North America, accounting for 73% of the number of deals with 53 deals in Q4 2012.

According to Prabhanjan Kumar Singh, “the decreased investment on the back of high Q3 investments in Europe and Asia-Pacific may not mean a damper on enthusiasm for nuclear power particularly in Asia-Pacific countries. While China, India and South Korea are moving ahead with their ambitious nuclear plans, countries like Vietnam, Indonesia and Bangladesh are forging their will to go for nuclear power. European countries such as the UK, France and Czech Republic are supportive towards the continued use of nuclear power, due to their high reliance on it as an energy source. The decrease in investment in may not sustain for long given the need of clean power and soaring fossil fuel prices.”