Powered up: takeovers including Tesla Motors’ purchase of SolarCity have propelled BAML to the top of the utilities and energy M&A rankings in 2016
Since the US investment bank was created at the start of 2009 when Bank of America completed its crisis-era takeover of Wall Street rival Merrill Lynch, the combined business has only once – when it finished sixth in 2011 – ended a year above 10th in the advisory rankings for energy and utilities M&A globally, according to data from research firm Dealogic.
In 2015, it came 10th, its $ 12.7 billion of deals over $ 50 billion behind the top bank, Citigroup.
Even pooling Bank of America’s and Merrill Lynch’s deal credit in the years before the creation of BAML, the combined business would not have finished a year at the top of the M&A advisory rankings for the energy and utility sector since it was dominant between the turn of the millennium and 2002.
The resurgence in M&A activity since the start of 2016, however, has buoyed BAML’s advisory bankers.
A Dealogic note on 2016 M&A in the sector published on August 2, shows that the US bank sits at the top of the rankings with $ 56.9 billion worth of M&A deals on its books in the year to August 2 – already more than four times its deal roster for the whole of 2015.
The turnaround for BAML comes off the back of a surge in dealmaking in the energy and utilities sector, where $ 162.2 billion deals have been announced so far in 2016, making it the third-biggest year on record at this point and the most lucrative since 2007
Billion-dollar-plus deals, likewise, are more common than in any year since 2007 to this point, with BAML involved in eight of this year’s 26 energy and utility transactions worth at least $ 1 billion. Across M&A deals in the sector of all sizes, BAML has worked on 14 deals – the joint most of any of the top 10 advisers, according to Dealogic statistics.
The bank’s billion-dollar mandates include: the $ 18.4 billion NextEra Energy bid for Energy Future Holdings’ Oncor business agreed on July 29; electric car maker Tesla Motors’ agreement on August 1 to buy SolarCity; Texas-based Waste Connections’ merger with Toronto-based Progressive Waste Management; and State Grid Corp of China’s bid for Brazilian power distributor CPFL Energia.
BAML has been building its power and energy team over the last five years or so, making a number of hires in 2010 including former Citi banker Julian Mylchreest, who became sole head of its global power and energy banking business in October 2015.
Wells Fargo Securities, another adviser on the NextEra Energy bid for Oncor, is another beneficiary of the surge in large utility and energy deals. The bank currently ranks third by deal value in 2016, having worked on four deals each worth at least $ 2 billion and total deals worth $ 42.3 billion, Dealogic said.
Wells Fargo has not ended a year in the top 10 advisers since Dealogic started its rankings in 1996.