Renewable Energy Growth Continues to Power NextEra’s M&A Engine
As company boards continue to debate the financial impact of sustainability issues, energy provider NextEra’s massive investments in renewable energy are beginning to pay off, and are now powering the company’s M&A and business development efforts.
NextEra announced today that the company has agreed to acquire energy transmission company GridLiance from private equity investor Blackstone for approximately $660 million. In addition, the Wall Street Journal this morning reported that NextEra has recently approached Duke Energy with an offer to purchase the $60 billion utility, citing people familiar with the matter.
Commenting on the takeover of GridLiance, NextEra CEO Jim Robo stated that the transmission company will benefit from the coming growth in renewable energy. Robo said:
“GridLiance partners with electric cooperatives and public power utilities to enhance transmission system reliability and is well positioned to benefit from the substantial expected renewables growth over the coming years. This acquisition furthers our goal of creating America’s leading competitive transmission company and is consistent with our strategy of adding high-quality regulated assets to our portfolio.”
After investing over $20 billion in renewable assets, NextEra has become the world’s largest generator of wind and solar power with a portfolio of more than 17,000 megawatts of renewable energy. The company has also invested significantly in developing a portfolio of battery storage assets.
These investments are now paying off. NextEra’s shares have significantly outperformed its peers, rising by more than 21% over the past year vs the S&P 500 Utilities index, which has declined by nearly 9%. NextEra’s market cap has increased over this period by more than the $20 billion it has invested in renewable energy over the past several years. Earlier this month, NextEra’s shares received an additional boost, after the company raised its long-term guidance, driven by the ongoing strength of the renewables development environment and the continued execution across all of its businesses.
Following the recent guidance raise, NextEra issued $2 billion in equity units in part to fund further investments in energy and power projects. The company today said that part of the proceeds will be used for the GridLiance acquisition.
NextEra’s investments in renewables have provided the company with the resources to continue extending its leading position as the energy generation market moves towards sustainable power generation. Following the recent guidance raise, CEO Jim Robo said:
“The market for low-cost renewables continues to rapidly expand, and we believe our best-in-class development skills leave us uniquely positioned to capitalize on these significant investment opportunities.”