Our International Valuation Newsletter series addresses current hot topics and upcoming themes. While some articles may focus on particular sectors or asset classes, all will have one thing in common: the provision of insights into the development and practical implementation of solutions to common challenges when valuing businesses and business assets. The newsletter is therefore of interest to those involved in valuations for transactions, financing, tax, accounting, restructuring and dispute resolutions, among other areas. It is also highly relevant to academics, lawyers and government or tax authorities.
International Valuations Newsletter – February 2022
Over the past years, a systematic shift has occurred in the world’s stance on renewable energy. The significance of the global energy transition from fossil fuels to renewable sources is widely acknowledged. The imperative of the transition from a fossil fuel-reliant society to a sustainable one is generally appreciated as being not only a global warming concern but also caused by the nature of fossil fuels as, by definition, being finite resources, which will eventually become prohibitively expensive as they deplete.
The need for a global energy transition, coupled with both increased governmental support and key technological advances, are hailing in renewable energy as the next frontier and are fueling the embracement of and the optimistic investment in a sustainable future.
Renewable energy valuation
In the midst of the global energy crisis – with some of the highest energy costs in decades – this edition of the Quarterly Brief introduces renewable energy, discusses the factors contributing to the recent wave of activity in renewables as well as how to approach renewable energy valuation.
In this newsletter, we explore questions such as:
- What are the major renewable energy sources and what is their current position in the global energy mix?
- What has contributed to the recent wave in renewable energy activity and investment?
- What are the key factors to consider when performing valuations of renewable energy projects?
Capital market data
Lastly, in the final section, we share with you our summary of key capital market data.Here are the latest developments at a glance:
- Major stock market performances: no longer accounting for the extreme volatility caused by the COVID-19 pandemic on a 12-month look back period, the markets continue to show mostly stable and positive return figures.
- S&P Eurozone BMI Index sector multiples: over the last two quarters, eight out of ten EV/EBITDA sector multiples decreased. While the decrease was relatively modest for most of the retrograding sectors, the impact for Financials, and Materials was substantial.
- Risk-free rates: the risk-free rates have not materially changed over the last six months. As of 31 December 2021, four risk-free rates analyzed were positive, and one was negative.
We look forward to discussing your questions regarding renewable energy valuation. As always, stay safe and healthy.
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