30 June 2017

Deals of the Year 2017

Personality of the Year Thomas DiNapoli, New York State Comptroller
Solar Vela Energy
Wind Khalladi, Morocco
M&A Total and Saft
IPO Dong Energy
Water Xylem/Sensus
Bioenergy MGT Teesside
Sustainable Forestry IFC/BHP Billiton Forestry bond
Energy Efficiency SUSI Energy Efficiency Project Facility
Catastrophe Risk Allianz Weather Bond
Weather Risk Old Settler Wind
Carbon FTSE Russell's Climate Balanced Factor Index

Much of the discussion around the low-carbon economic transition has focused on risks - the risk that assets will be rendered stranded or the risk the climate change will disrupt businesses, for example.

So, it is refreshing that Environmental Finance's 10th annual Deals of the Year awards are all about opportunities – investments flowing into businesses that are aligned with the low-carbon economy or are part of solutions to the problem of climate change.

Whether it is constructing the UK's largest bioenergy plant, or investing in energy efficient lighting in small to medium sized enterprises in Ireland, the energy transition is generating investment opportunities galore.

There are a few key themes I would like to highlight from this year's winners:

1. Companies are responding to the energy transition

Among the award winners can be found so-called brown companies that are responding to the energy transition.

Look at French oil and gas giant Total. It won M&A of the year for its acquisition of French battery firm Saft, which it said complements its previous acquisition of a majority stake in solar firm SunPower.

Dong is another example. It has sold its upstream oil and gas business and is focussed on scaling up its offshore wind business.

Contrast the actions of Total or Dong with those of ExxonMobil, which has been involved in a protracted battle with shareholders, led by Personality of the Year Thomas DiNapoli, who just wanted it to disclose what its plans were for dealing with the low-carbon transition.

The shareholder resolution passed even without the backing of the Exxon board.

2. Mainstream finance is flowing into low-carbon investment

The Deals of the Year winners are full of examples of asset owners pouring their money into low-carbon investments. These include PKA backing the MGT bioenergy plant in the UK (or large institutions buying Vela Energy's solar bond or insurance-linked securities), or investing in Susi Partners' energy efficiency fund.

3. The opportunities are becoming better recognised

The debate is shifting away from risk and towards opportunities. That is not only evidenced by the fact that institutions are increasingly investing in renewables and other types of low-carbon alternative assets.

A great example can be found in FTSE Russell's Climate Balanced Factor index, which takes into consideration FTSE Russell's Low Carbon Economy data, which identifies companies' green revenues, alongside more traditional factors such as value. The idea is that companies with green revenues could outperform as the transition to a low-carbon economy accelerates. A fund tracking the index has won investment from an HSBC pension fund.

Congratulations to all our winners.

To go back to the awards page click here.

Peter Cripps

Deals reporting by Joe WalshMichael HurleyGraham Cooper Peter Cripps