AEG Affiliated Energy Group Financial Closing 6 M&A Deals in Past 10 Months; All Deals Involving Exit Strategy of Selling REPs/ESCOs Specifically
HOUSTON, August 11, 2023 (Newswire.com) - AEG Financial forecasts additional closings in the near future with increased activity due to recent market turbulence, noted AEG Financial's Rob Potosky.
According to AEG Financial's Chad Price, deals closed by AEG Financial over the last 10 months include:
- Sale of all of Bulb UK's North American Assets.
- Sale of a Large C&I Gas Book in Texas in January 2023.
- PJM Book in process of closing and sold to Clearview, with AEG advising seller (recently mentioned by Paul Ring of Energy Choice Matters).
- Sale of well-established brand's book to a listed company in December 2022.
- Sale of another well-established brand's book to a listed company in late November 2022.
- Sale of one of the last remaining mid-sized retail electricity providers via a closing that is presently in progress, with no updates on this deal until at least September 15, 2023.
- Advising on two financings/capital raise efforts (neither one involved a change of control, as good news for the borrowers).
On each of these deals, AEG Financial was the sole exclusive advisor in the deal and advisor to Seller, and no other financial advisor was involved. Moreover, each of these deals involved a licensed retail energy provider (or "ESCO"), as opposed to vendors of an REP.
AEG Financial further noted that some market participants appear to be quoting incorrect market comps on some deals, apparently not realizing they're quoting and using incorrect comps and unverified information, possibly based on "sales" type flyers or promotional email updates. AEG Financial's Chad Price notes, "If using a market comp or metric to guide you in your M&A expectations based on a rumor or an unverified emailed newsletter of some sort, it is important to verify either (a) the source actually was retained to have a role and involvement in the deal; or (b) the information can be verified by independent publicly available data. Our deals have mostly been private, with the valuations not released publicly, and yet we've seen a recent newsletter or two by parties apparently implying knowledge that is actually incorrect or unverified. This emphasizes the importance of using solely trusted market information and comps when planning M&A decisions - going to the negotiation table with incorrect data can be fatal."
AEG Financial also noted an uptick in perceived turbulence with many REPs' sources of financing supply (lockbox providers), even before the recent run-up in spot and DAM prices caused by the record heat in certain territories. As noted by AEG Financial's Rob Potosky, "We believe recent increased tensions between REPs and their wholesale supply financing sources at a general level denote misalignment of risk appetites, as independent REPs are finding it more and more difficult to stay hedged at economical prices to cover extreme weather events, at least in a manner that keeps their lenders happy over an extended period of time. This is, in some cases, ironic and avoidable, although as good news for parties looking to sell, there are still a large number of purchasers in the market looking to grow via portfolio acquisitions."
Source: AEG Affiliated Energy Group Financial