What is driving renewables M&A activity in 2024?

Global growth, new technologies and increased investor interest in renewables have driven a series of notable M&A deals in sustainable infrastructure sector so far in 2024. We look at what we can read into deals at Actis, Aquila Capital and European Energy, as well as one that got away.


January 23, 2024

  • General Atlantic is growing its assets to $96bn by buying Actis
  • Commerzbank is buying 74.9% of Aquila’s asset management arm
  • And RWE has gone public on a failed takeover bid for Ørsted in 2023


Is it Easter yet? Most of us have only been back for three weeks after the Christmas break, but the pace of merger and acquisition (M&A) activity in the renewables sector in 2024 is making our team at Tamarindo feel like months have passed.

It started with BlackRock’s $12.5bn takeover of Global Infrastructure Partners, which we discussed in last week’s analysis piece, and has continued to gather pace. Here, we look at the biggest deals of this year so far – and one that didn’t happen – to find what each of them can tell us about M&A in the renewables sector.


1) General Atlantic buys growth markets investor Actis

On 16th January, US firm General Atlantic announced it was buying growth markets investor Actis, which has $12.5bn of assets under management.

Actis is set to become General Atlantic’s sustainable infrastructure arm after the deal closes, which is due by the end of June. The enlarged firm will have $96bn of assets under management, and General Atlantic said the purchase would help it to diversify its investment platform, which currently focuses on six areas: climate, consumer goods, financial services, healthcare, life sciences and technology.

When we look at Actis, we tend to focus on its energy infrastructure firms that currently include Levanta Renewables, Nozomi and Rezolv, but Actis also has interests in sustainable infrastructure and real estate companies too. On that basis, we see strong overlap with General Atlantic’s diversified strategy and market focus, which should bode well as they become more closely integrated.

The deal is likely to make General Atlantic a more recognisable name in renewables, even if does not directly invest in power generation, and will boost its financial clout in an industry where scale is becoming more important. This rush for scale and technology diversification will be key drivers of M&A deals in this sector in 2024.


2) Commerzbank buys 74.9% of Aquila asset management arm

On 18th January, Germany’s Commerzbank revealed it was buying a 74.9% stake in asset manager Aquila Capital Investment, with Aquila Group set to retain the other 25.1%. The deal is due to close by the end of June 2024.

However, this transaction is more complicated than the acquisitions of GIP and Actis because it only deals with one part of the Aquila Group. Aquila Capital Investment is the group’s asset management arm, with €14.6bn of assets under its control. Roman Rosslenbroich, chief executive and co-founder of Aquila Group, said that the backing from Commerzbank would enable the pair to develop net-zero investment products.

However, the takeover does not include stakes in Aquila Group’s development arms in the Asia-Pacific or EMEA regions, both of which are called Aquila Clean Energy, or its data centre and green logistics arms (see graphic, below).

This split reminds us of the ‘yieldco’ structures that US renewables operators used in the first half of the 2010s: firms would set up a ‘yieldco’ to hold operational assets and bring in investors who wanted to benefit from predictable returns, while keeping their riskier development activities in a separate business.

Commerzbank’s deal with Aquila seems to do similar by enabling the pair to offer low-risk investment products based on the operational assets run by the asset management arm, while keeping riskier development work in arms that remain in Aquila Group’s full control.

For Commerzbank, a deal with Aquila will also help boost its sustainable credentials after criticism in 2021 about the scale of its exposure to fossil fuels companies. This need to publicly become ‘greener’ will also be an important factor for some acquiring firms in 2024.


3) Mitsubishi HC Capital becomes 20% shareholder in European Energy

On 19th January, Danish wind and power-to-X developer European Energy revealed it has sold a 20% stake in the business for €700m to Mitsubishi HC Capital.

European Energy said it was bringing in Mitsubishi HC Capital as a strategic investor by issuing it 72million new shares in the company, and the transaction will make Mitsubishi HC Capital the second-largest shareholder in European Energy. The deal is due to close by the end of June 2024.

This is different to the Actis and Aquila deals because Mitsubishi HC Capital is not joining as a majority shareholder. However, the transaction is notable because this €700m injection is set to help European Energy build out its project pipeline, which exceeds 60GW and includes the world’s largest e-methanol plant, in 28 countries.

This deal shows the growing attraction of power-to-X projects for investors, and the importance for developers to look beyond pure wind or solar farms in their project pipelines. More investors want to gain a foothold in technologies that promise to make a major contribution to the energy transition, and M&A can be a quick way to help them do so.


4) RWE failed to buy Ørsted after Danish government objection

Finally, German utility RWE got industry tongues wagging last week when it revealed that it tried to buy Danish rival Ørsted in the second half of 2023 – but failed because the deal was quashed by the Danish government.

We don’t want to give too much oxygen to a deal that didn’t happen, but the fact that RWE decided to talk about it publicly is notable. The fact it did tells us that there will be more discussions happening behind the scenes, and it would not surprise us if any of BP, Equinor, Shell or Total revealed a deal to buy a major renewables-focused utility in 2024. It could be a quick way to build scale and to burnish their renewables credentials.

Mergers between renewables-focused utilities could make sense too. For example, there is more clamour in the industry for the need to move away from a “race to the bottom” in offshore wind tender processes, to put the industry on a more sustainable footing. One way to curb this competition would be for major utilities to merge, either with partnerships or formal M&A deals, while also benefiting from economies of scale.

It is worth remembering that this deal did not happen, and so it could have fallen apart for other reasons even if the Danish government hadn’t got involved. But we wouldn’t be surprised to see a major M&A deal between renewables-focused utilities this year. After the year we’ve had so far, we don’t think any M&A deal could take us by surprise — but we look forward to being proved wrong.