Industry | Select Recent M&A Activity
M&A: Solomon Corporation, a leading provider of refurbishment, repair and salvage services for electrical transformers and related electrical equipment has been acquired by Sunbelt Transformer. Sunbelt Transformer is a portfolio company of Trilantic Capital Partners. Solomon Corparation was previously a portfolio company of GFI Oaktree Capital Management. HW served as the exclusive advisor to Solomon Corporation
M&A: Petroleum Service Corporation, a leading provider of product handling and site logistics services for the petrochemical, midstream, and marine transportation end markets has been acquired by Aurora Capital Partners. Petroleum Service Corporation was previously a division of SGS.
M&A: Miliken Infrastructure Solutions, a leading manufacturer of products for water and wastewater infrastructure restoration has been acquired by ClockSpring|NRI. ClockSpring|NRI is a portfolio company of Wind Point Partners.
M&A: Rotating Machinery Services, a leading provider of specialty aftermarket repair, maintenance and overhaul services for large, highly engineered rotating machinery has been acquired by Cortec Group.
M&A: Quick Connectors, a leading manufacturer of artificial lift accessories for the electrical submersible pump (ESP) and gas lift end-markets has been acquired by Innovex Downhole Solutions. Innovex Downhole Solutions is a portfolio company of Intervale Capital.
M&A: Wolverton, a leading full-service transportation and civil engineering firm specializing in areas including traffic, land surveying, and the power/utility sectors has been acquired by CHA Consulting. CHA Consulting is a portfolio company of First Reserve Corporation.
M&A: Houston Controls, a leading provider of industrial instrument, electrical and analytical services for routine maintenance, turnarounds and capital projects has been acquired by Universal Plant Services.
Public Markets | Key Trading Statistics1
What We’re Reading
Oil & Gas | Permian Poised for Next Pipeline Wave
“Thanks to growing production from the Permian Basin, another wave of new crude oil takeaway capacity will be needed by the end of the next decade, according to natural resources consultancy Wood Mackenzie. As production growth expands well into the 2030s, U.S. Gulf Coast-bound pipeline capacity will tighten. By the mid-2030s, Permian-to-Gulf Coast pipeline utilization will surpass 92 percent in the absence of further investment, necessitating pipeline expansions or greenfield capacity. According to Wood Mackenzie, a “moderate overbuild of pipeline capacity” should occur early next decade as the current wave of pipeline projects conclude. By the end of 2022, midstream operators should add approximately 4 million barrels per day (bpd) of new capacity bound for the U.S. Gulf Coast, the firm stated. Wood Mackenzie contends the new capacity should translate into “two to three years of overbuild.” Subsequently, it expects the need for additional pipeline infrastructure as “normal long-haul capacity supply and demand conditions” resurface.”
Utilities | Private Equity Investment in Storage Expected to Increase
“Investments in the energy storage sector have been sluggish, with big investments coming primarily from corporate venture capital, such as big oil companies. Citing data from analytics website AngelList, the average valuation for an early stage energy storage company is roughly $6.2 million. No private equity firm could possibly dip their toes in the water with a company with so little valuation. While VC funding in the storage sector dropped in the first quarter from 2018 to 2019, Mercom Capital data shows funding for the solar sector in Q1 2019 totaled $176 million, up from $161 million in Q1 2018. Private equity firm Energy Capital Partners (ECP) recently announced that it acquired energy storage developer Convergent Energy + Power for an undisclosed amount. The deal could spur further investments into the growing energy storage sector. The energy storage sector is a multi-billion, trillion dollar market going forward, and is poised to garner the interest of other investors. Even though the pace of investments in energy storage currently lag behind those in solar, the size of the energy storage market is expected to be significantly larger than the solar sector.”
Engineering & Construction | Drones Will Soon Be Inspecting Wind Turbines
“Lashed by rain and hail, subjected to freezes and thaws, and tested by the sheer girth of towers and blades stretching ever skyward. Over time, the relentless exposure to the elements and high-stress loading conditions can damage components. Now, researchers are testing autonomous inspection technologies intended to catch cracks, erosion and other flaws before repair or replacement is needed. The most common methods used by wind project owners and operators to inspect wind turbine blades today are less than ideal. Technicians often perch a camera with a high-powered telephoto lens atop a tripod at the base of a turbine and take pictures of both sides of individual blades, from root to tip, with a focus on the leading edge on the wind-facing front of the blade. The hope for project owners and operators is to avoid having to send human inspectors down on a rope or up in a basket on a crane to inspect blades up close.”
Oil & Gas | Permian Shale Boom Slowing Down
“Producers in the nation’s oil-rich shale basins are dialing back growth plans in the face of a growing panoply of problems that’s killing returns, and keeping skeptical investors away. The constraints are manifold: pipeline limits, reduced flow from wells drilled too close together, low natural gas prices and high land costs. But the most consequential is that shale-well production falls off at such a high rate -- as much as 70% in the first year -- that you need to keep spending cash on new wells just to maintain output. In the five years since oil fell below $30 a barrel from more than $100, a resilient shale industry has established the U.S. as the world’s top oil producer. Now, cracks are opening in that survival tale, with companies dropping their 2019 growth rates. In the early years, Wall Street had been happy to fund shale growth, framing the budding sector as a young, technology-driven industry, ripe for future returns. But as the shale fields aged, the returns never came and shareholders are now pushing for payback at the expense of additional oil growth.”
Energy Efficiency | Cleantech Venture Capital is Back? Early Numbers Say Yes
“While all venture capital sectors suffered during the Great Recession, one notable sector was almost completely left out of the corresponding recovery: Cleantech. But quietly, while most of the institutional investor universe was ignoring the sector, cleantech venture capital returns appear to have rebounded to quite attractive levels. One key insight that comes through from the data is that returns have really picked up just over the past few years. While in fact they do confirm the poor results generated by those investments during the "cleantech bubble" years of 2005-2009, investments made from 2010-2013 did a bit better, and then those investments made even more recently have thus far produced 23.9% gross IRRs. Secondly, it's clear that part of what's driving this improved performance has been a general shift away from upstream, manufacturing, and capital-intensive investments that continue to provide poor returns.”
Recent M&A Transactions1,2
Public Markets Overview
Energy Equipment and Services1
Power Equipment and Services1
ABI: Derived from the AIA’s monthly Work-on-the-Boards survey, an index score above 50 denotes increased billing from prior month,
and vice versa.
DMI: 12-month indicator of future construction spending and demand for construction products / services.
Harris Williams is a leading advisor to the energy, power, and infrastructure M&A market. Our Energy, Power & Infrastructure Group has experience across a broad range of sectors, including services, products, and technologies that support or enhance energy and power infrastructure.
Select Recent Experience
3. Baker Hughes
4. U.S. Department of Commerce
5. American Institute of Architects
6. Dodge Data & Analytics
The information and views contained in this report were prepared by Harris Williams LLC (“Harris Williams”). It is not a research report, as such term is defined by applicable law and regulations, and is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any securities or financial instruments or to participate in any particular trading strategy. The information contained herein is believed by Harris Williams to be reliable but Harris Williams makes no representation as to the accuracy or completeness of such information. Harris Williams and/or its affiliates may be market makers or specialists in, act as advisers or lenders to, have positions in and effect transactions in securities of companies mentioned herein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addition, Harris Williams and/or its affiliates or their respective officers, directors and employees may hold long or short positions in the securities, options thereon or other related financial products of companies discussed herein. Opinions, estimates and projections in this report constitute Harris Williams’ judgment and are subject to change without notice. The securities and financial instruments discussed in this report may not be suitable for all investors and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives. Also, past performance is not necessarily indicative of future results. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Harris Williams’ prior written consent.
Harris Williams LLC is a registered broker-dealer and member of FINRA and SIPC. Harris Williams & Co. Ltd is a private limited company incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales (registration number 07078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. Corporate Finance Advisors GmbH is registered in the commercial register of the local court of Frankfurt am Main, Germany, under HRB 107540. The registered address is Bockenheimer Landstrasse 33-35, 60325 Frankfurt am Main, Germany (email address: firstname.lastname@example.org). Geschäftsführer/Directors: Jeffery H. Perkins, Paul Poggi. (VAT No. awaited). Harris Williams is a trade name under which Harris Williams LLC, Harris Williams & Co. Ltd and Harris Williams & Co. Corporate Finance Advisors GmbH conduct business.