Ansarada has seen a 14% increase in data rooms year-on-year across all sectors, however it’s a different story for the energy, utilities, materials, and industrials (EUMI) sector.
All four industries reported a double digit drop in Q2 2024, ranging from an 11% contraction in energy to a 25% decline in materials. Yet the software-as-a-service (SaaS) platform is starting to see a resurgence in M&A activity off the back of a complex geopolitical and economic climate.
“(Once) we expand our point of reference from the three months to 30 June 2024, the story begins to change. Despite the recent softness, both energy and industrials recorded more activity in Q2 than in the prior corresponding period,” Ansarada says in its 2024-25 M&A outlook for the EUMI sector.
The platform compiled a panel of industry dealmakers to share their insights, and enriched it with data from more than 37,000 transactions in Ansarada’s deal platform in its latest Global EUMI M&A Outlook Report.
However, looking ahead over the next 12 to 18 months, experts interviewed for the report say attitudes towards M&A within the industry are ‘cautiously optimistic’.
As the energy transition gathers pace and demand for the required materials grows, dealmakers will be looking for new opportunities to grow their margins and market share, and lock in the benefits of greater scale.
“Importantly, businesses will be measured in their approach to M&A. Management teams are likely to be cautious in who they approach and why. Companies are looking to transform their digital ecosystems to improve their margins while at the same time modernising their finances to help drive faster business decisions.” the report says.
Meanwhile, in the 12 months to 30 June 2024, utilities and materials both saw an uptick in activity. Comparing 2023-24 to 2022-23, industrials was the only segment that saw a decrease in dealmaking. This suggests the EUMI sector has reached an inflection point.
“The economic uncertainty that has been stifling M&A over recent years is either starting to abate, or businesses are becoming more comfortable with the risks it poses and are finding ways to push acquisitions through to meet their long-term goals,” according to the report.
Globally, the utilities segment has attracted plenty of attention. In the year to 30 June 2024, utilities recorded a lift in M&A activity across every geographic region except the Middle East and Africa. According to Ansarada’s report, a similar trend can be seen in materials, which recorded an increase in deals when comparing Q2 activity in 2024 to the same period in the previous year across the same regions.
This was surpassed only by energy, which posted a significant increase in Q2 2024 versus Q2 2023 activity across the board. This included triple-figure gains in three regions – Australia and New Zealand, the UK and Ireland, and the Middle East and Africa.
The report notes there is a consensus that a renewed focus on the green energy transition will be the major driver of EUMI dealmaking in the coming years.
“In order to successfully transition away from traditional sources of energy generation, economies will need to update their power infrastructure and secure the supply of key metals and minerals used in generation and storage technologies,” the report says.
“And with new ESG reporting requirements being introduced by several major governments (including Europe, the US, and Australia), businesses across the EUMI spectrum are under mounting pressure to make the necessary changes. At the same time, demand for energy is lifting.
“New technologies – particularly AI and related big data systems – require immense amounts of power to run, and as these technologies become more widespread the push to upgrade energy systems is expected to grow significantly. This comes as citizens in emerging markets are increasingly adopting amenities which have long been a part of day-to-day life in more developed countries, thus creating additional demand for power. Notably, this theme is tipped to also support traditional coal and gas for the foreseeable future.”
Ansarada is a SaaS platform for companies, advisors, and governments to use to securely manage critical information in high-stakes projects like M&A, capital raising, restructures, insolvencies/bankruptcy, audit, and infrastructure procurement.
Write to Adam Orlando at Mining.com.au
Images: Ansarada
