Research

Objectives

This study is based on analyses of public and internal databases and provides the reader with a comprehensive overview of M&A activity in the German cleantech sector in 2010.

In addition to the relevant market drivers, trends and samples of the transactions closed, the report also gives reliable benchmarks for valuation of German cleantech firms. In this way, the study serves as a point of insight for investors, financiers and owners, as well as consultants and research analysts for the German cleantech sector.

Executive Summary

In 2010, with a 3.6% increase in GDP, the German economy achieved its strongest growth since reunification. The unemployment rate fell to a record low and the DAX gained 14.3%.  Looking at the situation as a whole, macroeconomic conditions could not have been better in 2010.

In the area of cleantech M&A activity, the number of transactions per year rose by 16% over the preceding year, after an increase of 16% in 2009 and zero growth in 2008.  In this regard it appears that the cleantech M&A market is falling back into its old growth trajectory, although most of the transactions came from the power generation sector and only a fraction of the deals were technology-driven. With respect to the overall M&A market, cleantech deals account for 6.4%, or approximately the same share as in 2009, although in 2010 we are dealing with a much high level of general M&A activity in Germany.

The average deal volume of transactions in the cleantech sector increased over 2008 and 2009. However, 2010 only saw four transactions with a volume exceeding €50 million.

Despite the excellent economic conditions, private equity funds and other investors again focused on investments in solar farms and wind farms with moderate returns but also with low risk. The announcement of cuts to the German Renewable Energy Act (the EEG) at the beginning of last year increased attention on these kinds of transactions and prompted a boom in the photovoltaic sector.   

Approximately one third of transactions came from the domestic market.  With respect to international transactions, the most active international buyers of German cleantech companies came from Switzerland, followed by the US and Great Britain. In 2010 as in previous years, strategic buyers closed significantly more deals in the cleantech sector than financial investors. Nevertheless, financial investor activity increased again in this segment, as it did in previous years. With 89 deals, most transactions were attributable to both strategists and financial investors in the power generation segment. This area is naturally heavily driven by the German programme of compensation for energy fed back to the grid (the Einspeisevergütung), and will subside along with additional cuts to this subsidy. 

Outlook

Any outlook on the topics and trends surrounding the cleantech field for the coming years would be an exercise akin to gazing into a crystal ball. Due to the cuts to the German Renewable Energy Act (the EEG), investments in large photovoltaic farms will certainly become less attractive. This will put the focus on other markets, such as Italy. Generally speaking, we see many interesting investment opportunities in the cleantech sector, such as e-mobility (infrastructure, electric car charging stations), power storage solutions for wind and solar, smart metering, green IT and many others. Adequate capital is available on the market to finance acquisitions as well as to fund young technology firms.  

Methodology

This M&A report is based on an analysis of over 600 transactions in the German cleantech sector since 2005.

The cleantech sector was divided up into the following segments: power/energy (generation, efficiency, infrastructure and storage), transport, production (e.g. smart production), materials, water & sewage, air & the environment (e.g. emissions control), agriculture (e.g. natural pesticides). This study focuses on the seller side and encompasses all transactions that targeted a German cleantech firm. The study includes an analysis of the transaction volumes as well as the buyer’s country of origin and industrial background, with special emphasis on transactions financed by venture capital and private equity.

CatCap’s research department used the following research tools in this study: CapitalIQ (since 2010), Bureau van Dijk, and especially the Markus and Zephyr databases. Majunke, Dow Jones Factiva, and our own statistical records were tapped for this.

If you have any additional questions, please contact:

Mark Miller
Partner
phone: +49 (0)40 300 836-11
e-mail: mark.miller@catcap.de

Marc Tympner
Senior Analyst
phone: +49 (0)40 300 836-18
e-mail: marc.tympner@catcap.de