Energy independence and security are also key themes: The war in Ukraine and disruptions to European energy supplies are pushing governments around the world to reconsider their dependence on other countries and invest in a more balanced, less vulnerable approach. Those trends supplement a longer-term focus on decarbonization and renewable energy and are driving additional investment in related businesses.
2023 Outlook - January 12, 2023
Energy, Power & Infrastructure
Innovative energy, power, and infrastructure services companies benefit from powerful trends, including the energy transition, corporate and government prioritization of ESG, geopolitical events, grid upgrades and maintenance, 5G expansion, and other related infrastructure investment.
Here, senior professionals from the Harris Williams Energy, Power & Infrastructure Group discuss the industry trends creating M&A opportunities this year, key subsectors to watch, and important shifts in investor dynamics.
Which trends are driving M&A opportunities in your industry?
Despite the choppiness in the market, long-term opportunities are plentiful, particularly in areas related to infrastructure and sustainability. Government spending on infrastructure is providing a long runway for growth in grid reliability, transmission and distribution, clean energy and renewables, water systems, and other areas, and we expect to see significant M&A activity in those subsectors.
Government spending on infrastructure is providing a long runway for growth.
Which subsectors are you watching most closely this year?
Infrastructure, Utility Services, and TICC
We expect infrastructure service providers to remain front and center, whether they are utility services, telecom services, utility substation services, vegetation management, water management, or TICC. Our team is also seeing strong investor interest in businesses related to roads, bridges and other types of transportation infrastructure, which are overdue for maintenance and improvement.
More recently, investors have also begun to show renewed interest in nuclear energy due to its important role in energy independence and the ongoing push for decarbonization.
How are buyer and seller dynamics shifting?
Over the last several years, M&A financing has been readily available. In today’s market, rising rates and increased scrutiny among lenders has made financing much less certain. Just as we help clients bring their story to potential buyers, we’re working with them to actively manage how they position themselves to lenders and secure the right capital structure.
And, like several other Harris Williams industry groups, we’re seeing infrastructure investors taking a broader view of their addressable opportunities. There’s a limited universe of pure infrastructure businesses, so we’re seeing them increasingly interested in adjacent opportunities and in a growing variety of businesses with infrastructure characteristics like recurring, contracted revenue and steady long-term growth.
Contacts
Drew Spitzer
Group Head
Managing Director
Matt White
Group Head
Managing Director
Luke Semple
Managing Director