Funding Patterns in the Global Energy Industry

  • June 2013
  • -
  • Frost & Sullivan
  • -
  • 47 pages

This research service studies the investments and funding patterns in energy companies globally. It identifies historical trends in funding and the probable criteria that investors use when analyzing an investment decision. The criteria are explained in detail through case studies. The study also provides the future outlook in terms of what companies can expect in terms of future patterns in funding. For the purpose of this study, an energy company is defined as one that has business in one or more of the following fields: integrated oil and gas, petroleum and petroleum products, natural gas pipelines, coal and consumable fuels, electric power by solar energy or wind energy, alternative fuels or fuel cells, and biofuels.

Key Takeaways

Things that companies need to keep in mind to enhance their opportunity to attain better funding sources:

Geographic Diversification
•The markets in Europe and north America are quite mature.
•However, Asia (especially India and China) has huge growth potential.
•Investors will look at these regions as high-growth geographies and expect better returns for given risks.

Focus on Renewables
•Lower GHG through renewables has led to much support for renewables.
•Sectors such as solar and biofuels showing high promise.
•Coal-, oil-, and gas-based companies need todiversify to renewables to enhance profitability in the long run.
•Consolidation may happen significantly in solar and biofuels.
•Solar-based funding is growing fastest.

R&D in Technology Is Crucial
•Investors look at breakthrough products or disruptive technology.
•Need to enhance the value chain.
•Effective asset management plays an important role in value creation.

Integrated Approach
•Companies seeking investors will need to closely monitor their leverage ratios and working capital management.
•Legal, financial market, and macroeconomic factors that are country specific affect the type of funding.
•Building stronger relationships with suppliers and backward integration should help raise long-term profitability.

Research Overview

This research service studies the investments and funding patterns of energy companies globally. The study identifies historical trends in funding and the probable criteria that investors use when analyzing whether or not to go ahead with an investment decision. These criteria are explained in detail through case studies. The study also provides the future outlook in terms of what companies can expect in future patterns in funding.

Geographic Coverage: Global.
Base Year: 2012.
Transactions Count: Approximately 3000 transactions.
Who Will Benefit: Energy companies, sovereign wealth funds, hedge funds, pension funds, insurance funds, private equity, mutual funds, fund managers, retail investors, and other members of the investing community.
Data Sources: Established business and financial databases, company websites, press releases, annual reports, and quarterly reports.

Definition of Energy Companies

An energy company is defined as one that has its business in one or more of the following fields of activity: integrated oil and gas, petroleum and petroleum products, natural gas pipelines, coal and consumable fuels, electric power by solar energy or wind energy, alternative fuels or fuel cells, and biofuels .

Aim and Objective of the Study
•To provide a financial analysis of the funding patterns in the energy market, and their implications over the course of the next decade and beyond.
•To provide insight into growth opportunities with a crisp analysis of what constitutes a healthy capital structure.

Market Segments Covered

Coal and Consumable Fuels
Natural Gas
Nuclear Power
Wind
Solar
Hydropower
Biofuel
Integrated Oil and Gas
Petroleum and Petroleum Products
Fuel Cells

Methodology
The companies’ capital structures are studied for the period of 2010 to 2011, and debt and equity patterns are reviewed.
Frost & Sullivan found some interesting patterns regarding the type of funding that companies may prefer depending on the sector and geography. Also, temporal trends indicate that we are in a transition phase globally, and funds may be easier to acquire for certain sectors while others will have to look at ways to reinvent themselves if they wish to capture the mind of the investor.
The conclusion to this study consists of opinions and recommendations to fund managers, retail investors, and other members of the investing community. This study is supported by comprehensive interviews with the top-level management of energy companies worldwide. In addition, extensive secondary research on market trends has been conducted to support the analysis.

Table Of Contents

Table of Contents

Executive Summary 4
Analysis of Historical Funding Patterns—Debt 9
Analysis of Historical Funding Patterns—Equity 13
Capturing the Investor’s Mind 17
Future Outlook in Funding Patterns 33
Conclusions 39
The Frost and Sullivan Story 43

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