Thoughts on Power and Renewables IB
Any thoughts on where Power & Renewable IB landscape is going? Seems to generally be relatively recession proof given the contracted and regulated nature of a lot of the utilities and IPPs in the sector. Also shift towards decarbonization seems like there will be a large amount of investment in new assets or optimizing the grid by players in this space.
Anyone with experience in this group in IB care to share their insights or thoughts on starting a career in these groups? Obviously tends to potentially pigeonhole for Power/Infra exit opps, but I'm interested in these so no problem there. Just curious on general thoughts out there. Thanks!
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Never heard of renewables
Also interested in the relation between power/utilities groups and recessions
If over levered they have to dispose of assets to reduce their leverage. So you should be fine.
I love the power space for personal nerdy/wonky reasons, I find the interactions between markets/public policy/engineering/environment fascinating and fully intend on being pigeonholed and making a career out of this sector. I think it could be hard to be enthusiastic about the jr banker grind if you aren't really into the content but some people end up getting into it. A lot of the day to day activity will be around your more old school power assets and transactions, but the conversations around renewables/grid mod/tech/etc are very relevant and definitely growing.
I wouldn’t overly worry about being pigeonholed into renewables early in your career. It’s true that the capital structure is somewhat unique due to the existence of tax equity (allows projects to raise capital to properly monetize the federal tax credits and tax benefits from accelerated depreciation), but the debt financing (non-recourse project financing) and m&a experience is directly relevant to all other facets of power generation and even the broader infrastructure sector. that being said, if you want broader experience in infra and power than I would encourage you to lateral to a.broader infra focused shop after 3-4 years of renewables.
This comment is A+. Tax equity is a very bespoke structure that if you properly learn given how egregiously complicated it is, will "open up" general infrastructure finance concepts. I would think that if you can model a renewables asset, any broader infrastructure asset should be easily doable
Renewables as an asset class also paths toward exits beyond just infrastructure such as broader energy (midstream stuff) or sustainability in general (stuff like what Generate Capital is doing) so would actually think that it is more versatile than your standard P&U. RPS targets in the U.S. are going to be in big focus over the next 10 years and lots of investment inflow expected to occur. Think every megafund infrasturcture PE group at this point has either a renewables carve-out (Carlyle Power Partners) as a fund, or are mandated to get more renewables exposure within a current fund & have a need for associates who are somewhat specialists in renewables (Blackstone, GIP, etc.)
In terms of some groups with notoriety, the one that comes to mind as being renewables-focused is Greentech. Guggenheim has a renewables-focused group, BAML/Barclays/Citi have worked with large renewable platforms in the past regarding processes. GS/Evercore/Centerview advised the big CPPIB-Pattern deal in Q419.
And then there are smaller shops that are more asset-focused in terms of M&A like Marathon and CohnReznick. Hope that helps
Agree with everything above.
Almost every core+ infra PE shop is going to at least touch upon renewables given the large availability of investment opportunities, contracted nature of the assets, and growth in the sector.
Regarding examples of exit ops, my shop's background is very solar + wind oriented, but my co-analysts and I personally have had very clear pathways to broader infra PE interviews at core+ and opportunistic funds. Of course, there are plenty of established and up-and-coming shops that focus exclusively on clean-energy-infra.
I will say that some funds will prefer broader infra and energy experience, but they will still likely give you the opportunity to interview and consider your candidacy.
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