UK energy sector powered by £9.9bn of M&A activity in H1’23

• The UK recorded £9.9bn of M&A activity in the energy, utilities and resources industry in H1’23 - new PwC research shows

• 86 EU&R M&A transactions were registered in H1’23 

• EU&R ranks as the third most valuable industry in H1’23 (£9.9bn) dealmaking activity - marginally behind technology, media and communications with £10.1bn and financial services with £10.2bn

Dealmaking has shown resilience and carried momentum within UK energy, utilities and resources (EU&R) sectors, according to the mid-year update from PwC’s Global M&A Industry Trends report.

In the UK, £9.9bn of EU&R M&A activity was registered in H1’23, with 86 transactions recorded throughout the first six months of the year. 

The findings show the combined EU&R sectors ranked as the third-highest for UK deal value in H1’23, behind technology, media and communications and financial services industries. 

Drew Stevenson, Leader of Industry for Energy, Utilities and Resources at PwC UK, said:

“These findings demonstrate that strategic energy transition and security of supply investment opportunities are dominating the capital flows across markets, and we expect this to continue for the remainder of 2023 and into 2024. 

“In the UK, total deal values in the recent past are above longer-term historical levels, demonstrating that investors and dealmakers are moving to rebalance portfolios and accelerate the energy transition. H1’23 saw just shy of £10bn of UK M&A activity recorded, with full year deal values of £31bn and £24bn in 2021 and 2022, respectively, compared with £9bn, £8.1bn and £12.9bn in full years 2018, 2019 and 2020. 

“Of course, the overall deal values reported are sensitive to the incidence of specific larger transactions, which in 2021 and 2022 included National Grid’s acquisition of Western Power Distribution, sale of the Rhode Island gas and electricity business and sale of a majority stake in the UK Gas transmission and metering business, alongside other large transactions such as KKR’s acquisition of ContourGlobal. Larger transactions have continued in June 2023, with the news from Eni and Neptune that they have signed SPAs for Eni and Vår Energi ASA to acquire Neptune Energy Group Limited, excluding its German business.”  

The findings showed that across industries in the UK in H1’23, the highest deal volumes were recorded in technology, media and communications (511), whereas financial services ranked highest in deal value (£10.2bn). 

Lucy Stapleton, Head of Deals at PwC UK, said: 

“The UK experienced a tough transactions market during the first half of the year as conditions to complete deals, particularly high value ones remained volatile. Gaps in valuations between buyers and sellers continued to feed uncertainty and high interest rates made financing deals difficult. Despite this, activity in H1‘23 has been resilient and while in terms of volume we are not seeing the record levels compared to the same period last year, they are still roughly around pre-pandemic levels.

“In spite of the macroeconomic backdrop dealmakers remain optimistic and there is pent up demand amongst dealmakers who remain poised to deploy capital when market conditions begin to stabilise and valuation gaps narrow. The mid-market is continuing to hold up as cash-rich corporates look for strategic opportunities and we may see more bolt-on transactions as well as sell-sides as private equity and corporates start to prepare to exit businesses.”

Tim Allen, Deals Industries and International Leader at PwC UK, added: 

“M&A activity within the industries was driven by opportunities linked to addressable market trends such as demographic change, technology advancement with the growth of generative AI and energy transition. This is evident from some of the deals we have seen involving fibre network investment in infrastructure and AI investment in the healthcare sector.”