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Analysis of renewable energy M&A activity in the Latin American (LatAm) region

image credit: Enerdatics
Mohit Kaul's picture
Founder, Enerdatics

Building Enerdatics. Leadership experience in a high growth SaaS company and secured a successful exit. A natural leader who cares about creating value for all stakeholders. Extensive experience...

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  • Jan 11, 2023
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Latin America has been attracting significant investor attention in the renewables space in recent years, driven primarily by Brazil and Chile. As per Enerdatics’ research, gross transacted capacity for generation assets in the region increased by nearly 2X year-on-year (y-o-y) to 33 GW in 2022, while the aggregate enterprise value of the traded portfolios grew by a whopping 3X y/y to more than $13bn during the year. With the aim of exploring key drivers of the explosive growth in this market since 2020, the Enerdatics research team has analyzed M&A activity in the region and summarized its findings on the attached slide, the highlights of which are:

– The surge in capacity was primarily due to large, gigawatt-scale asset and corporate deals in Brazil, with Chile emerging as the second most attractive market in the region

– In 2022, deal activity for under-development wind and solar assets in Brazil surged to ~2X 2021 levels, driven by a staggering seven acquisitions for more than a gigawatt of gross capacity

– Like most developing economies, the pool of investors attracted to the renewables space is well diversified, with private equity (PE) firms including KKR, Global Infrastructure Partners and Actis, oil majors such as TotalEnergies and Galp, and veteran independent power producers namely ENGIE, AES, and CEMIG announcing large deals during the year

– KKR’s takeover of ContourGlobal and its 6 GW portfolio of renewable energy assets primarily in Brazil, marks the largest deal in the region since 2017

– In Chile, Innergex’s $686mn deal for operational onshore wind assets marks the largest deal in the country since 2017, and comes in at an enterprise value multiple of $2mn/MW, representing one of the highest EV metrics in the region

– Industrial mining conglomerates are driving demand for solar energy in Chile, however, the country lags well behind Brazil in terms of deal activity, primarily due to transmission system bottlenecks

– Going forward, Enerdatics expects Brazil and Chile to continue driving deal activity in LatAm, as distributed energy resources and offshore wind power develop simultaneously to satisfy growing power demand from the industrial sectors

The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.

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