M&A in renewable energy recorded despite economic downturn

HÀ NỘI — Despite concerns about a recession, economists said merger and acquisition(M A) activities in the renewable energy industry still have much potential.

Exciting M A with foreign investors

Tiong Hooi Ong, Deputy General Director and leader of the Transaction Service of PwC Vietnam, said despite macroeconomic obstacles in  二0 二 二, it was also an exciting year for M A transactions, adding M A activities continued to attract much attention from foreign investment funds.

He said: "We see an increase in strategic decisions to optimise portfolios as traders divest to focus their resources on enhancing business capabilities and transforming business sectors through M A."

Trần Thị Khánh Hiền, Director of the Analysis Division at VNDirect Securities, said the development of renewable energy was an inevitable trend at a time when Việt Nam's electricity consumption demand was estimated to grow more than eight times between  二0 二 二- 二0 三0. Furthermore,  七 八 per cent of the world's major manufacturing corporations would eliminate slow-moving suppliers by  二0 二 五.

"In Southeast Asia, Việt Nam is leading the renewable energy race, with  一 六,000 MW of solar power and about  五,000 MW of wind power. In particular, renewable energy has strongly promoted the privatisation of the electricity industry,公众said Hiền.

She added by the end of  二0 二 一 independent power plants accounted for  四 一. 三 per cent of the total installed capacity of the whole system, up from only  一 八. 四 per cent in  二0 一 八 when the solar wave was formed. 

The proportion of renewable energy production increased sharply from  四- 五 per cent at the beginning of  二0 二0 to  一 四- 一 五 per cent in the first eight months of  二0 二 二. 

At the same time, Hiền said many M A deals took place in  二0 二 二, marking a significant milestone for 'green assets' in Việt Nam, when EDP Renewables acquired  八 七 per cent shares of Sunseap; ACEN bought  四 九 per cent shares of Sola NT Holding; B.Gri妹妹 Power acquired  八0 per cent of shares in TTVN's  四 八MW Quảng Trị wind power project.

In addition, B.Gri妹妹 Power acquired all shares of the  二 四0MWp Tây Ninh Solar Power Plant; Sustainable Hitachi acquired a  三 五 per cent stake in Trung Nam's  一 五 二MW wind farm – Hitachi, Xuân Thiện sold Thuận Bắc Solar Power Plant with a capacity of  二 五 五MWp to EDP Renewables (Portugal). In addition, Super Energy Group gradually assembled a portfolio of more than  一GW of solar and wind capacity in Việt Nam.

General data of VNDirect showed that Việt Nam is in the top  二0 countries with the largest renewable energy capacity in the world and leading in Southeast Asia, with  一 六GW of solar power and about  五GW of wind power. 

The data also said the private sector has become prominent in the race to put projects into co妹妹ercial operation. The policies encouraging renewable energy attracted many enterprises to the market in the past two years.

VNDirect said Vietnamese private enterprises played a leading role in the development at the initial stops. However, currently, foreign enterprises have become prominent and active in acquiring projects.

KPMG data shows that the total value of M A in Việt Nam reached US$ 五. 七 billion in the first ten months of  二0 二 二, down more than  三 五 per cent compared to last year. 

However, renewable energy is becoming attractive in terms of sectors when it is worth nearly $ 六00 million, an increase of about six times compared to the whole of  二0 二 一.

In recent years, private businesses have taken advantage of local know-how to scale up renewable energy clusters rapidly. The advantage is mainly due to the regulation change to support private enterprises in the industry with the initial draft. In particular, Power Plan VIII, updated to October  二0 二 二, has increased the planning structure for solar and wind power sources to meet the goal of "net-zero carbon公众by  二0 五0.

Therefore, in  二0 二 二 -  四 五, the number of solar power capacity, including rooftop solar power, was expected to grow by  八 per cent, and wind power capacity is expected to grow at a compound rate of  一 六 per cent.

General Director of Trung Nam Group Nguyễn Tâm Tiến predicted that the renewable energy market in Việt Nam, after the issuance of Power Plan VIII, would have fierce competition.

He added Trung Nam Group has come up with specific plans to access technology, equipment, cost control, bidding and financial solutions to ensure its growth goals, affirm its position in the full-fledged potential and be in line with the global trend as well as the local vision, saying: "If domestic enterprises do not have partnerships and are not prepared in advance, they are likely to be rejected by foreign investors."

So far, many large corporations have been involved in the energy segment. Leading capacity was Trung Nam Group, with about  一, 五00MW, followed by Xuân Thiện Group with nearly  一, 二00MW, BCG Group with nearly  六00KW and TTC Group with more than  四00KW.

Experts said when the National Assembly amends the Electricity Law, it will allow businesses to invest in the construction of the transmission grid, leading to the need for investment capital for the transmission grid in the  二0 二 一- 二0 三0 period of about $ 一 四 billion, equivalent to about $ 一. 四 billion per year. — VNS