Businesses which require huge investments need solid funding sources or a sustainable business model. Because revenues in such business might have ups and downs, that is why we see the tremendous demand for infrastructure fundraising and renewable energy funding sources. But many companies also look for ownership route and go in for oil and gas equity. Let us look at how the Oil and Gas M&A landscape pans out in today’s business environment.
For more than two years, mergers and acquisitions in the oil and gas sector have held center stage. Last year, about $164 billion worth of deals were signed in this sector. But just two years back, the figure was little more than a third of that. There were primarily four kinds of deals that held the attention of industry watchers.
The first was where the company involved decided to completely transform itself. The companies involved did not step back and sell off their assets after facing huge financial losses. They diversified their business and acquired productive assets and used those to repay their debts. Oil companies diversified into copper mining or drilling companies acquired other companies which were into other aspects of research and exploration.
The second strategy is of accelerated growth in the same line of business. This helped such companies to scale up their capacities quickly. Shale core business is one example which has seen a lot of activity of this kind. This kind of M&A usually takes place in the same peer group of the acquirer.
Another strategy that was followed was to bring in monetization with the help of diversification. The company keeps its position in its core strength and additionally takes advantage of new opportunities. This helps to expand the portfolio in newer areas while continuing to do what it was strong at.
Finally, another strategy followed was to increase/improve the grade by hiving off non-core or lower margin assets. This helped the company to get better returns on the core assets while divesting parts of its assets which would be more helpful to other players.
One of the major players which helped in oil and gas M&A activities was Kapok Capital. Its long experience in fundraising and M&A activities helped it raise equity as well as debt. Across the globe, Kapok has been part of several large deals which have helped in the consolidation as well as expansion plans of many players in the oil and gas space.
For more than two years, mergers and acquisitions in the oil and gas sector have held center stage. Last year, about $164 billion worth of deals were signed in this sector. But just two years back, the figure was little more than a third of that. There were primarily four kinds of deals that held the attention of industry watchers.
The first was where the company involved decided to completely transform itself. The companies involved did not step back and sell off their assets after facing huge financial losses. They diversified their business and acquired productive assets and used those to repay their debts. Oil companies diversified into copper mining or drilling companies acquired other companies which were into other aspects of research and exploration.
The second strategy is of accelerated growth in the same line of business. This helped such companies to scale up their capacities quickly. Shale core business is one example which has seen a lot of activity of this kind. This kind of M&A usually takes place in the same peer group of the acquirer.
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Another strategy that was followed was to bring in monetization with the help of diversification. The company keeps its position in its core strength and additionally takes advantage of new opportunities. This helps to expand the portfolio in newer areas while continuing to do what it was strong at.
Finally, another strategy followed was to increase/improve the grade by hiving off non-core or lower margin assets. This helped the company to get better returns on the core assets while divesting parts of its assets which would be more helpful to other players.
One of the major players which helped in oil and gas M&A activities was Kapok Capital. Its long experience in fundraising and M&A activities helped it raise equity as well as debt. Across the globe, Kapok has been part of several large deals which have helped in the consolidation as well as expansion plans of many players in the oil and gas space.
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