The Indian power sector saw a surge in mergers and acquisition activity in the first five months of this calendar year with 17 deals worth $1.6 billion taking place between January and May 2016 representing a 166 per cent increase over the $601 million in the year-earlier period, according to EY, a global professional services firm.
“We expect the strong transactions trend to continue with both domestic and foreign players looking to expand their portfolios,” Kuljit Singh, National Power & Utilities Leader, EY India said.
Renewable sector“Within the power sector, the renewable energy segment has steadily gained prominence owing to low availability of domestic fuel and increased volatility in international coal prices,” it said.
However, while the renewable sector saw 11 deals in the period, making up 65 per cent of the total number of deals in the five-month period, the total deal value in the space was only $177 million, or 11 per cent of the total deal value in the power sector in the same period. However, this is expected to improve.
“Deal activity in the renewable segment is expected to gain momentum as several large operational portfolios come up for sale/private investment and a large number of green-field assets are opened for bids by the government,” Mr. Singh said.
Six of the renewable sector deals were domestic transactions.
The thermal power sector is also beginning to gain traction.
“Improving fuel linkages for the thermal power sector is expected to garner investor attention in the very few, good-quality thermal assets,” according to him.
“Burgeoning debt levels would also compel the not-so-good thermal power producers to bring an increased number of distressed assets to market this year,” he said.
