KBS - Testing, Inspection, Certification & Compliance - Market Insight

M&A ACTIVITY CONTINUES TO RISE WITHIN THE TICC INDUSTRY UK companies within the TICC, energy efficiency & carbon reduction and environmental compliance industries are in increasing demand.

Deal activity for UK environmental sustainability-related companies increased by 32% in Q3 2024 compared with the previous quarter’s total of $15.5bn, and rose by 19% in comparison to Q3 2023.

Related deal volume increased by 11% in Q3 2024 versus the previous quarter and was 14% higher than in Q3 2023. The Energy, Utilities and Resources sectors recorded £18.2bn of M&A activity in 2023.

The increases are based on the following factors:

ENERGY TRANSITION:

The energy transition and security of energy supply is a significant part of M&A activity, with total investment in UK cleantech having reached £2.8bn in 2022.

Greenfield and brownfield continue to gain momentum, with capital funding across the renewable sources of wind, solar, hydroelectric and bioenergy. For example, LDC invested significantly into Boston Energy, a technical services provider to the wind energy industry.

Consolidation of complementary providers will accelerate the commercial sustainability and growth of energy transition-focused businesses.

Energy storage is also a sector that is seeing growth and is attractive to private equity firms, as energy security has become increasingly important in the UK and EU. This paves a pathway to respond with demands on the electricity grid, e.g. Gresham House Energy Storage Fund invested in a portfolio of utility-scale operational battery energy storage systems in the UK. ENVIRONMENTAL COMPLIANCE: The environmental compliance and due diligence market is expected to grow from $9.18bn in 2024 to $9.7bn in 2025 at a CAGR of 5.7%. It is expected to reach $12.56bn at a CAGR of 6.7% by 2029. Corporate social responsibility (CSR) advancements in sustainable technology and governmental pressure all contribute to this growth. CROSS-INDUSTRY CONVERGENCE IS DRIVING NEW OPPORTUNITIES: Firms are seeking to synergise across industries to uncover new opportunities. Technological firms have invested into renewables and energy storage for data centres to meet their ESG goals. Conversely, industrial firms are acquiring, and merging with, energy firms to secure reliable power to decarbonise manufacturing. This convergence will fuel innovative partnerships, e.g. German companies formed the Pro-Fusion association to drive fusion energy development.