Veteran bankers take renewable energy jobs

Seasoned bankers who have advised mega-deals in oil and gas are moving into renewable energy M&A advisory roles as the global energy industry becomes increasingly focused more about growing low-carbon companies.

The global push towards cleaner energy and net-zero emissions has also created something of a transition dilemma for bankers. Some have gone from advising oil and gas companies on multibillion-dollar contracts to working with clients on smaller-scale renewable energy contracts.

Although the total value of deals in the clean energy sector has surged in recent years, it still represents only a fraction of the value of mega-deals in the oil and gas industry. On the other hand, growing net-zero emissions and ESG trends promise much more work for bankers in renewables in the coming decades, while the field and scope of work in fossil fuels will shrink, say the bankers.

“When you’re in traditional oil and gas, that field is inevitably going to shrink over time with the shift to net zero,” said Ralph Ibendahl, managing director and head of energy transition EMEA at RBC Capital Markets. Reuters.

Renewables on the rise

“If you’re a renewable energy banker, you’re going to be busy for the next 30+ years,” Ibendahl added.

Although Europe has seen an increase in renewable capacity installations in recent years and renewable energy in the EU surpassed electricity generated from fossil fuels for the first time in 2020, Europe will still have need for significant clean energy capacity, Ibendahl noted Last year.

“Europe potentially needs to quadruple renewable capacity additions by 2050 compared to what has been installed in the last 10 years. This is going to require a lot of capital,” he noted.

Lots of capital, private investment and start-up acquisitions will shape the renewable energy sector in the decades to come. Forecasts estimate that investments in clean energy must at least triple if the world has any chance of achieving net zero emissions.

The volume of mergers and acquisitions (M&A) in the renewable energy sector jumped more than 11 times last year compared to five years ago, according to Refinitiv data quoted by Reuters.

At the same time, the value of all oil and gas deals globally last year was ten times greater than the value of renewable energy deals. Oil and gas deals totaled $290 billion, ten times the value of renewable energy deals, the data showed.

JP Morgan and Citi are the best oil and gas financial advisors

In 2021, JP Morgan and Citi were the top oil and gas M&A financial advisers by value and volume, respectively, according to GlobalData’s Financial Transactions Database. show in January. JP Morgan advised on 29 deals worth $81.3 billion, the highest value of any adviser tracked. Meanwhile, Citi led by volume, having advised 30 deals worth $54.2 billion.

In terms of value, Goldman Sachs came second to JP Morgan with 12 deals worth $57.3 billion, followed by Citi with $54.2 billion, Barclays with 17 deals worth 43, $3 billion and RBC Capital Markets, with 30 deals worth $35 billion.

In terms of volume, leader Citi was followed by RBC Capital Markets, JP Morgan, Jefferies and Perella Weinberg Partners.

Major Oil Companies Are Increasing Their Clean Energy Business

In terms of value, deals in oil and gas still far exceed the value of deals in renewable energy, but some bankers are bracing for the huge investments and other deals in low-carbon energy, including those undertaken by the major oil and gas producing companies.

“While their development dollars are still overwhelmingly skewed towards traditional energy, the big oil and gas companies are spending most of their time thinking about the transition,” Rob Santangelo, the bank’s co-global head of the bank, told Reuters. investment fund for energy and infrastructure at Credit Suisse.

Strategic and financial players, including utilities and investment funds, continue to drive deal activity in the renewable energy sector, but others such as oil and gas majors, insurance companies and pension and sovereign funds are entering the market at an accelerated pace, business advisory firm FTI Consulting said in its outlook for renewable energy M&As in the United States for 2022.

“We are seeing a strategic shift from energy majors to allocate more capital to renewable and clean energy technologies, as evidenced by historic announcements of sustainability and clean energy commitments, and construction and acquisition of low-carbon assets and businesses,” FTI Consulting mentioned.

In some of the latest such offerings, Shell bought Savion LLCa large-scale solar energy and energy storage developer in the United States, and BP acquired AMPLY Poweran electric vehicle fleet charging provider in the United States

“As energy majors work towards their energy transition and sustainability commitments, expect to see new investment in renewables, especially offshore wind, and energy transition more broadly. , including hydrogen, biofuels, electric mobility and carbon capture and storage projects,” says FTI Consulting.

By Tsvetana Paraskova for Oilprice.com

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