2023, robust activity with notable achievements.
In 2023, Tevali Partners underwent substantial transformation, driven by several especially noteworthy large-cap achievements.
A highlight of the year involved strengthening our partnerships with several key market players including Quaero Capital, CVE and Corsica Sole as well as welcoming new ones such as Q Energy, Altarea, and Infranity. These alliances strengthen our position as a boutique trusted advisor in the industry and reinforces brand and new visual identity. It aligns seamlessly with our strategic positioning and embodies our commitment to our core values of demanding excellence and expertise.
We successfully executed multiple major transactions, including Infranity’s minority stake acquisition in IEL (Iridium) and Q Energy’s sale of a 170 MW asset portfolio (Condor). The team also provided counsel to EnergieTeam in its refinancing operations of an asset portfolio of over 300 MW (Thoraga) and designed and structured an innovative €30M financing plan for CVE backed by a large solar portfolio under development (Praia).
In total, our team coordinated refinancing totaling €650M and facilitated M&A transactions with a value in excess of €2bn.
A resilient market within a challenging macroeconomic context
Our market analysis for 2023 revealed a landscape of evolving challenges and strategic shifts. A major point of concern is the continued market consolidation, as many players have integrated into larger groups this will constrain the future dynamics of the market. On the core infrastructure deals front, there has been a noticeable increase in liquidity costs impacting recent transactions. This economic pressure has led historical players in renewable infrastructure to pivot their investment strategies. Instead of continuing along traditional paths, they are now redirecting their investments through renewable asset platforms.
Up until mid-2023, the expected IRR by investors had not aligned with this shift in liquidity costs. The renewable energy infrastructure market had indeed shown a degree of resilience to these broader macroeconomic conditions. However, post-mid-2023, there has been a trend towards homogenization with other sectors, leading to a repricing of expected IRRs, now trending towards the high single digits. Additionally, a significant trend observed in the M&A processes is the prevailing presence of strategic investors (industrials) over financial investors (funds).
Tevali Partner' Outlook for 2024: a year of growth, innovation, and expanded market impact
As we enter 2024, Tevali Partners is poised for a year of growth and expanded capabilities. The beginning of the year marks the arrival of new team members and a strategic enhancement that positions us to extend our reach in mid-cap operations. This reinforcement of our team reflects our ongoing efforts to broaden our service offerings and deepen our impact on the market. A key focus for us in 2024 will be to build upon the groundbreaking transaction we facilitated for CVE. We intricately structured a bond financing model anchored to a portfolio of development projects. This success story not only showcases our expertise but also sets a precedent for future endeavours.
Currently, we are assisting a developer in securing financing and equity for a significant 600MW platform (mid to late stage development), signalling a promising opportunity for interested parties as we prepare to launch the consultation (interested parties are welcome to contact us). The first quarter of 2024 has already seen a robust deal flow, reflecting our growing team's dynamism and effectiveness. With a renewed identity that reflects our forward-thinking approach, Tevali Partners is well-equipped to face challenges and opportunities. We extend our gratitude to our clients and partners for their continued trust and look forward to forging stronger relationships and achieving shared successes in the year ahead.
2024 renewable energy M&A trends: shifting dynamics and emerging markets
The M&A market within the renewable energy sector is anticipated to undergo significant changes in 2024, particularly within private equity investments. A key factor driving this change is the rising cost of liquidity, which will likely constrain financing sources. Consequently, greater reliance is being placed on equity capital for investments, signifying a departure from leveraged strategies.
Additionally, the challenges faced by equity funds in raising capital from their LPs towards the end of 2022 and throughout 2023 are likely to manifest in 2024. This scenario will result in a more selective investment approach, with an increased tendency towards club deals among partner funds. Such collaborations could become a strategic way to pool resources and share risks, particularly in the face of tighter financing conditions.
Furthermore, 2024 is set to witness the strong emergence of new markets within the renewable energy sector, such as energy storage, energy efficiency, ecomobility, and hydrogen. These emerging fields offer substantial opportunities for diversification and expansion for companies engaged in the energy transition. This broadening of the market landscape not only provides new avenues for investment but also allows established players to expand their services and adapt to the evolving energy needs and technological advancements.
Overall, these factors collectively point towards a dynamic and potentially transformative year for M&A activities in the renewable energy sector.
Be stronger than your excuses! Go 2024!
Steven Kassab & Michael Tobelem