M&As and Investments Increased in the Nuclear Energy Market in Q1 2012

Tuesday 12 June 2012, Amsterdam

The new Nuclear Energy Quarterly Deals Analysis: M&A and Investment Trends - Q1 2012 report is an essential source of data and trend analysis on mergers and acquisitions (M&As) and financing in the nuclear energy market. The report provides detailed information on M&As, equity and debt offerings, private equity and venture capital (PE/VC) and partnership transactions recorded in the nuclear energy industry in Q1 2012. The report discloses detailed comparative data on the number of deals and their value in the past five quarters, categorized into deal types, segments and geographies. The report also offers information on the top advisory firms in the nuclear energy industry.

The data presented in this report comes from proprietary in-house Nuclear Energy eTrack deals database, and primary and secondary research.

M&A Activity Increased in the Nuclear Energy Market in Q1 2012

M&As and asset transactions, which include changes in the ownership and control of companies or assets (this report does not consider this value as a new investment in the market), in the nuclear energy industry registered a substantial increase in deal value with $1.1 bn in Q1 2012, as compared to $328.3m in Q4 2011. The large difference in deal value was due to Treasury Ministry of Poland’s sale of a 7% stake in PGE Group for $795m. However, the number of deals decreased 33% to 22 in Q1 2012 from 33 in Q4 2011.

The industry registered two high-value deals of over $150m, which accounted for 90% of the total deal value in Q1 2012. North America accounted for half of the M&A deals in the oil and gas industry with 11 deals in Q1 2012, down 21% from the previous quarter’s 14 deals. Asia-Pacific recorded a decrease with six deals in Q1 2012, down 33% from nine deals in Q4 2011. The uranium mining and processing sector registered 19 deals worth $253.8m in Q1 2012, as compared to 25 deals worth $252m in Q4 2011. Uranium Energy’s acquisition of Burke Hollow Project in Texas; SinoGas West’s agreement to acquire a 60% interest in Eagle Lake Uranium project from Eagle Plains Resources; Cameco’s agreement to acquire a 27.9% interest in Millennium Uranium project in Saskatchewan from AREVA Resources for $152m; and Renaissance Uranium’s agreement to acquire an 80% stake in EL 4836 from SAEX were some of the high-value asset transactions recorded in Q1 2012.

According to Analyst Prabhanjan Kumar Singh, “Despite the increase in total M&As and asset transactions value, the nuclear industry has witnessed lesser number of deals in Q1 2012. Barring the PGE Group deal for $795m the M&A sector has remained more or less uneventful. The passivity can be attributed to nuclear patron’s stance to remain in watchful mode few longer. However the supporters of nuclear power can have a sigh of relief as the results of the stress tests that were performed on nuclear reactors have been largely positive and reinstating confidence in nuclear power.”

New Investments Increase in the Nuclear Energy Industry in Q1 2012

Investments in nuclear energy companies, including new investments through equity/debt offerings and financings by PE/VC firms, recorded a substantial increase of 95% in deal value with $33.8 bn in Q1 2012, as compared to $17.3 bn in Q4 2011. The large difference in deal value was due to capital raising through debt instruments by some of the renowned companies such as BHP Billiton, EDF, Enel and Rio Tinto. The number of deals registered a 17% decrease from 137 in Q4 2011 to 114 in Q1 2012.

The majority of investments came in the form of debt and reached $33 bn in Q1 2012, which accounted for 98% of new investments in the nuclear energy industry. Capital raising, through debt offerings by companies in Europe, registered a significant increase in the number of deals and value with 28 deals worth $19.9 billion in Q1 2012, as compared to 11 deals worth $10.5 bn in Q4 2011. Global equity offerings, including initial public offerings (IPOs), secondary offerings, and private investment in public equities (PIPEs), registered an increase of 20% in deal value and a decrease of 43% in the number of deals with $828.4m from 62 deals in Q1 2012, as compared to $690.7m from 108 deals in Q4 2011. Companies in Asia-Pacific recorded the majority of equity offering deals with 34 in Q1 2012, followed by companies in North America with 25 deals.

According Analyst to Prabhanjan Kumar Singh, “The companies involved in debt offerings are increasingly seeking monetary support for general financial requirements and corporate purposes. The upward trend in new investments can be indicative of the positive outlook towards pursuing nuclear power. On the contrary, in terms of number of deals, a 17% decrease has been witnessed as compared to the previous quarter which indicates indecisiveness of mid size investors to pursue nuclear power as a profitable sector due to market uncertainties.”

Increased Financing through Debt & Equity Offerings in Q1 2012

Global debt offerings, including public and private debt placements, by nuclear energy companies registered a substantial increase in the number of deals and deal value with 51 deals worth $33 bn in Q1 2012, as compared to 26 deals worth $16.6 bn in Q4 2011. The increase in the number of deals and deal value was driven largely by some of the large companies such as BHP Billiton, which made five debt offerings for aggregate gross proceeds of $5.25 bn; Electricite de France’s four debt offerings for aggregate gross proceeds of $5 bn; Enel’s two debt offerings with a combined worth of $4 bn; and Rio Tinto’s four debt offerings for aggregate gross proceeds of $2.5 bn, which together led to a substantial increase in the number of deals and deal value in Q1 2012. Public debt offerings registered a substantial increase in the number of deals and deal value with 40 deals worth $29.6 bn in Q1 2012, as compared to 17 deals worth $11.4 bn in Q4 2011, while private debt placements registered a marginal increase in the number of deals from nine in Q4 2011 to 11 in Q1 2012. However, deal value registered a decrease from $5.2 bn in Q4 2011 to $3.4 bn in Q1 2012.

Global equity offerings, including initial public offerings (IPOs), secondary offerings, and private investment in public equities (PIPEs), registered an increase of 20% in deal value with $828.4m in Q1 2012, as compared to $690.7m in Q4 2011. However, the number of deals decreased 43% from 108 in Q4 2011 to 62 in Q1 2012. PIPE segment registered 55 deals, which accounted for 89% of the total deals in Q1 2012, down from 85 deals in Q4 2011. However, deal value registered an increase from $195.1m in Q4 2011 to $316.9m in Q1 2012. Secondary offerings registered a significant decrease in the number of deals with seven in Q1 2012, as compared to 21 in Q4 2011. However, deal value registered an increase from $494.7m in Q4 2011 to $511.7m in Q1 2012.

According to Analyst Prabhanjan Kumar Singh, “A substantial increase in the global debt and equity offerings as compared to the previous quarter can be indicative of increasing confidence among supporters of nuclear power. The positive stress test results have been marginally effective in softening the nuclear power regulators stance and rebuild public confidence in nuclear power. The growing energy needs and the government’s commitment to cut down carbon emission will tempt companies to opt for nuclear power.”

Investments Increased in North America, Europe and Asia-Pacific in Q1 2012

North America, Europe and Asia-Pacific recorded a significant increase in deal values with $8.4 bn, $20.7 bn and $5.8 bn in Q1 2012, as compared to $3.3 bn, $10.5 bn and $5.8 bn respectively in Q1 2012. The number of deals in North America and Asia-Pacific decreased from 87 and 59 deals in Q4 2011 to 53 and 47 deals respectively in Q1 2012, while deals in Europe increased substantially from 18 in Q4 2011 to 34 deals in Q1 2012.

Australia recorded considerable nuclear power activity in Asia-Pacific, accounting for 96% of the number of deals with 45 deals in Q1 2012, while Canada recorded considerable nuclear power activity in North America, accounting for 53% of the number of deals with 28 deals in Q1 2012.

According to Analyst Prabhanjan Kumar Singh, “Regional investments are also indicating a positive trend with Europe emerging supreme. This can be indicative of the determination of countries to cut down on their carbon emissions. In the North American region Canada is playing a significant role as it accounts for the majority of deals in the first quarter of 2012. The increase in the number of deals compared to the previous quarter indicates a positive response from the Canadian nuclear industry despite safety concerns. Through technological advancements, an increase in safety may lead to increasing number of investors pursuing nuclear power as a profitable venture. In Asia-Pacific, Australia, despite being a non nuclear nation, plays a substantial role in nuclear power industry through its uranium reserves and mining operations. An increase in the investment in Australia represents an increasing need for the pursuit of nuclear power.”