Canadian investment firm Brookfield is set to acquire UK-based renewable developer Banks Renewables in a deal valued at nearly $1 billion. This comes as a new report by LSEG Deals reveals that in 2023, the number of UK M&A deals fell to a 14-year low, resulting in a total value of £144.7bn, down 45% year on year – bringing its lowest year-to-date total since 2009.
Brookfield Asset Management, which is listed in Canada, will be adding 11 onshore wind assets in England and Scotland to its Brookfield Global Transition Fund. The deal is being valued at around USD 1 billion. the sector has received a boost following the UK government’s decision to end its eight year ban on onshore wind farm development.
Deal underscores attractiveness of UK clean energy assets
In 2023, M&As involving a UK target have only reached a value of £77bn, which is just over half the value recorded during the same period in 2022, according to the same report. This coincides with a 48% decrease in domestic M&A and a 49% decline in inbound deals.
Economic indicators suggest the potential for the UK to bounce back from this 14-year fall. This includes the CMA’s latest announcement of its provisional approval of the $69bn Microsoft-Activision merger, as well as other forms of M&A activity such as Aviva’s recent acquisition of AIG for £460 million.
This news comes at a vital time, with research from DealRoom reporting that increased support into the M&A sector could quadruple its value to $4 trillion. However, there is also the need to create a fair and competitive landscape for startups and small businesses to continue to thrive, which the CMA has been committed to doing.
UK companies continue to receive overseas interest
In tandem, despite the fall of activity, the UK continues to be receiving overseas interest, with other deals such as Asian giant Shein in talks to buy UK online-fashion retailer Missguided and US-based Westrock’s $20bn M&A deal with Irish packaging company, Smurfit Kappa.
UK M&A expert Claire Trachet said Brookfield’s acquisition of Bank Renewables indicates a significant investment into the UK deals market, meaning we could start seeing a rebound in investor confidence. “Despite the current market conditions, the merger, as well as other recent high-profile takeovers, reflect foreign investors’ confidence in the UK as an investment destination. That being said, UK companies must be prepared to act on deals when their opportunity arises,” she added.
Acquirers from foreign countries know they will be getting a bargain from low valuations, potentially leading to a flurry of M&A deals, presenting a more positive outlook for M&A activity in the UK. However, this poses an issue for companies getting less than they bargained for.
There are also a growing number of investors who are sat on a dry powder pile having deterred investments in 2022. This means there are significant opportunities on the horizon at the end of Q4 and the beginning of 2024, and now is the moment to prepare and get deals ready as optionality will increase towards the end of this year.”
