Co-venturers can leverage the technical capabilities of one partner to deliver a much more effective outcome than would be possible for either of them individually.
Philip Morgan
Freshfields Partner and head of the firm’s energy and natural resources practice in Asia
M&A during the early stages of a venture – whether at the individual project level or at the corporate level – enables smaller and/or more niche market participants to have a magnified impact, says Philip Morgan, Freshfields Partner and head of the firm’s energy and natural resources practice in Asia.
'Co-venturers can leverage the technical capabilities of one partner to deliver a much more effective outcome than would be possible for either of them individually, and M&A which supports increased vertical integration enables these smaller entities to be involved across the value chain at an earlier point in a project or business lifecycle, with greater impact.'
Where specialist operators and/or technology providers have partnered with major industry players or project developers, each party will need to carefully anticipate the path towards FID (final investment decision) and project commissioning and ensure that there are appropriate off-ramps at the right time (or potentially carry or other structured funding arrangements in place) if the equity funding requirements of the project are likely to exceed the capabilities of any of its participants. (Our recent post on considerations for 'green hydrogen' projects includes some of our insights on JV/M&A activity in the low-carbon hydrogen sector.)
