Private Equity Buys Almost $15bn In Renewable Energy Big Time

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Private Equity Buys Almost $15bn In Renewable Energy Big Time

Private Equity Insights

The world is rapidly shifting towards clean renewable energy solutions, driven by their immense potential to mitigate climate change and achieve global net zero targets. Surprisingly, private equity firms are at the forefront of this trend, investing heavily in solar, wind, biomass, and other renewables.

These firms are drawn not only by the social and humanitarian benefits but also by the economic advantages of renewables, which include low-cost power, reduced reliance on imported fuels, and a more secure, reliable energy supply.

Private capital is experiencing a surge in acquiring renewable energy developers, increasingly favoring equity-based take-private deals for leveraged buyouts due to high interest rates and rising electricity demand.

The statistics underscore this movement. In 2023, private equity and venture capital transactions in the global renewable energy sector nearly reached $15 billion.

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Moreover, funds raised for renewable energy projects in recent years are approaching 25 times the value of fossil fuel asset fundraising, per another industry report. This significant financial commitment highlights the growing recognition of the economic viability and long-term benefits of renewable energy investments.

Key investors such as KKR & Co. Inc., Brookfield Asset Management Ltd., EQT AB, and Energy Capital Partners LLC have actively bid for listed renewable platforms this year, aiming to accelerate the companies’ installed capacity in the coming years.

After a period of limited dealmaking activity, asset managers and infrastructure funds are now leveraging their project development skills as they grow more comfortable with the renewable energy sector. Brookfield Renewable Partners, for instance, has a strong track record of acquiring developers with significant pipelines in the US.

Peter Zhu, managing director at Macquarie Group Ltd.’s Green Investment Group, highlighted that the current higher interest rate environment has adjusted equity returns for renewables favorably, creating an attractive investment window for leading renewable platforms.

Last month, private equity firm EQT offered offered to acquire Swedish renewable energy company OX2 for $1.5 billion. The goal is to enhance EQT’s renewable energy portfolio and boost OX2’s growth in the energy sector.

This shift indicates a strategic pivot in private capital investment, focusing on

The full article is available here. This article was published at Private Equity Insights.

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