Barry Fraser, director of corporate finance at Grant Thornton in Aberdeen
Aberdeen’s energy sector has witnessed an increase in M&A activity as confidence returns to the sector, according to Grant Thornton.
The business and financial advisor has reported an upturn in deal activity, led – in part – by increased orders and a more positive outlook for the industry.
The firm’s corporate finance team, based in Aberdeen, has worked on a number of significant deals in recent months, and transaction activity in the sector has increased across corporates, private equity and the public markets.
UK Initial Public Offering (IPO) activity in the energy sector had been one of the biggest casualties of the downturn. However, Grant Thornton recently advised on the UK IPO of an energy services company with the AIM admission of Tekmar Group plc, the market-leading provider of subsea cable, umbilical and flexible pipe protection systems. This closely followed the reverse takeover of Sound Energy Holdings Italy Limited by Saffron Energy plc and the AIM re-admission of the enlarged group, Coro Energy Plc.
Barry Fraser, director of corporate finance at Grant Thornton in Aberdeen, said: “The last few months have been very busy for the team here in Aberdeen. Transaction activity in the energy sector may not be back to pre-downturn levels, but there’s certainly a return of confidence with investment increasing, new business being developed and deals now being completed. Much of this has been driven by order books and trading activity starting to increase.
"A number of experienced private equity investors and management teams are viewing it as a good time to grow businesses through bolt-on acquisitions with the likes of BGF and Blue Water Energy backing ROVOP and EV backing Westwood Global Energy Group to make bolt-on acquisitions. We also saw EnerMech being acquired a couple of weeks ago by The Carlyle Group to continue the expansion of that business.
“As with all industries, an uncertain political climate brings challenges and the energy sector is not immune to this threat, which can impact access to capital amongst other things. Another risk is access to a skilled workforce when activity rises and this can create a war for talent resulting in rising costs, at a time when huge success has been achieved in reducing cost across the industry. Despite those fears, we’re in a far better place in the market and should approach the year ahead with confidence.”
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