93% of PE investors plan to make at least one investment in energy-related assets by 2026

An overwhelming majority (93%) of private equity fund managers expect to make an investment in the energy sector over the coming five years as they seek to capitalise on the post-pandemic rebound in global demand for power and government-backed stimulus programmes.  Of these, over half (51%), stated they were ‘extremely likely’ to invest in energy.

The findings are revealed in a new study, Recovery to Rediscovery: Capitalising on a Changed Private Equity Landscape, which was commissioned by Auxadi1, a leading provider of accounting, tax and payroll services to private equity, real estate, and multinationals. It was based on interviews with senior-level private equity investors with average assets under management of €14.4 billion.

The research highlights GP appetite for the renewable energy, with 89% of investors describing the outlook as positive of which a third (33%) say it is ‘very positive’.   Almost two-thirds (62%) of investors believe that pandemic-driven government commitments to green infrastructure investment, such as the $2 trillion clean energy infrastructure plan introduced by President Joe Biden in the US, are most likely to influence investor allocations to private equity over the coming two years.

Over half (52%) of respondents cited the need for GPs to pivot towards to sustainable investment strategies and a similar number (51%) highlighted the falling costs of building renewable energy assets. Only half this number of GPs (26%) believe that meeting carbon reduction and climate goals will have a tangible influence on renewable allocations in the next two years.

According to BloombergNEF data, private equity investment in renewables totalled $2.6 trillion between 2010 and 2019, and the trend is set to accelerate in 2021 as renewable generation is expected to surpass oil and gas to become the largest area of energy spending2.

The Information Technology sector, which has played such a vital part in keeping businesses operating during the pandemic, is the second highest ranked sector with 92% of private equity investors planning to make at least one investment in the next five years.

Victor Salamanca, CEO at Auxadi said: “Rising demand for electricity and surging coal and gas prices reflect an extremely tight energy supply that shows little sign of rebalancing any time soon.  With COP26 fast approaching, private equity allocations to energy and renewables in particular will continue to soar as GPs capitalise on a compelling opportunity to generate outsized returns and pursue their sustainable investment commitments.”

To view a copy of Auxadi’s ‘Recovery to Rediscovery: Capitalising on a Changed Private Equity please visit: www.auxadi.com/en/private-equity-report

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Notes to editors

1 Research conducted by Pure Profile among a panel of 100 senior-level private equity investors in April 2021. Respondents were split evenly between the UK, Continental Europe and North America

2 “Climate Change: Renewables Investment” BloombergNEF

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Founded in 1979, Auxadi is a family-owned business working for multinational corporations, private equity funds and real estate funds. It’s the leading firm in international accounting, tax compliance and payroll services management connecting Europe and the Americas with the rest of the world, offering services in 50 countries. Its client list includes many of the top 100 PERE companies. Headquartered in Madrid, with offices in US and further 22 international subsidiaries, Auxadi serves 1,500+ SPVs across 50 jurisdictions.

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Borja Miquel
Citigate Dewe Rogerson

Chris Jarvis
Citigate Dewe Rogerson

All information contained in this publication is up to date on 2021. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice.No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.