Dealmaking activity in the European power sector reverted to normal levels in the first half of 2022, with three large take-private transactions and several big-ticket stake sales among the highlights.

European power and gas companies announced or closed 331 M&A transactions during the first half with an aggregate deal value over €31 billion, according to S&P Global Market Intelligence data. The year-ago period — in particular the first quarter of 2021 — saw frenzied activity in the sector, producing 428 deals totaling nearly €66 billion.

With first-half activity in 2022 more in line with the years prior to the pandemic, the period was notable for three significant take-private deals in the European power sector.

U.S. private equity giant KKR & Co. Inc. was responsible for two of them, offering to buy both French renewables developer Albioma and London-listed power producer ContourGlobal PLC. Meanwhile, an investment vehicle advised by J.P. Morgan Investment Management Inc. acquired and delisted Italian wind and solar group Falck Renewables SpA.

War prompts divestments

Russia's Feb. 24 invasion of Ukraine has had a major impact on Europe's energy sector, and it has forced European power companies to rethink their ties to Russia.

Italy's Enel SpA, for example, agreed in June to sell its entire stake in its Russian unit to PJSC Lukoil and the Gazprombank-Frezia fund. The company had about 5.6 GW of conventional power generation in Russia along with a 300-MW wind portfolio.

Other significant divestments may follow soon, with Finland's Fortum Oyj also planning to exit Russia by selling its own local unit and that of its subsidiary Uniper SE.

Gas, renewables sales

The first half saw National Grid PLC sell a 60% stake in National Grid Gas PLC, its U.K. gas transmission and metering business, to a consortium of Macquarie Asset Management Inc. and British Columbia Investment Management Corp., in what was the latest example of infrastructure investors buying up power and gas networks from European utilities.

On July 21, Britain's SSE PLC announced that a formal process is underway for the sale of a 25% stake in SSEN Transmission, its unit responsible for power transmission in the north of Scotland, with the deal planned to complete by the end of 2022.

Elsewhere, Spanish oil major Repsol SA struck a deal with Crédit Agricole Assurances SA and Energy Infrastructure Partners AG to sell a 25% stake in its renewable energy business for €905 million.

The most active buyer in the first half was British investment manager Greencoat Capital LLP, according to Market Intelligence data.

Greencoat announced or closed multiple renewables investments in the period via its two listed funds, the U.K.-focused Greencoat UK Wind PLC and the European-focused Greencoat Renewables PLC. That included buying stakes in the 312-MW Borkum Riffgrund 1 offshore wind project in Germany and the 1.2-GW Hornsea 1 offshore wind farm in the U.K., both developed by Ørsted A/S.

S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.