Fitch Publishes Findings on U.S. Renewables M&A
A surge in renewable M&A activity has been fueled by the advent of yield-type vehicle in recent years as well as several utility parent holding companies looking to expand their contracted portfolio. 2015 has seen the most robust deal flow and solar transactions have surpassed wind. Though valuations vary, EV/EBITDA multiples for wind projects have typically been in the 9x-11x range, while solar transactions have fetched above 12x. Most yieldco transactions imply a cash available for distribution yield of 8%-10%.
In Fitch's view, the ongoing contraction in yieldco equity valuations is likely to force a recalibration regarding cost of capital, inducing a greater discipline in M&A transactions.