Smart Energy Finances: Shell's EV network acquisition and energy investment megatrends

This week’s edition of Smart Energy Finances looks at Shell USA Inc., which has reaffirmed its march into the Electric Vehicle (EV) arena with the acquisition of EV network developer Volta Inc.

This M&A announcement came in as Investcorp, partnering with IMB Business School, announced the results of its latest survey concerning top investment trends. The survey found the energy sector to be a dominant area for investment, specifically energy security, renewables and EVS/batteries.

Topping the survey was AI and digitisation which, although not directly linked, have widespread correlation and application within energy, especially with regards to efficacy and critical infrastructure performance.

Shell’s supercharged M&A

Shell’s USA subsidiary is acquiring Volta Inc. at $169 million, bringing Volta’s dual charging and media network to the oil giant, a move hoped to expand their opportunities in EV charging.

Shell USA Inc. will acquire all outstanding shares of Class A common stock of Volta at $0.86 per share in cash upon completion of the merger, which represents an approximate 18% premium to the closing price of Volta stock on January 17, 2023, the last full trading day prior to the announcement of the transaction.

The transaction provides the opportunity to unlock Volta's signed pipeline of charging stalls in construction or evaluation and capture what Shell is calling a seismic EV charging market opportunity.

Volta's extensive network leverages its proprietary PredictEV platform, which uses behavioural science and machine learning tech to help commercial property owners, cities and electric utilities plan EV infrastructure intelligently, efficiently and equitably.

Have you read:
ABB invests in Danish startup to digitalise ageing electrical assets
Developing the venture capital investment space to have an impact on climate tech

An affiliate of Shell will provide subordinated secured term loans to Volta to bridge Volta through the closing of the transaction.

The transaction is expected to close in the first half of 2023. Upon closing, Volta's Class A common stock will no longer be listed on any public market.

Goldman Sachs & Co. LLC and Barclays Capital Inc. are serving as advisors to Volta, and Shearman & Sterling LLP is serving as Volta's legal advisor.

Raymond James & Associates, Inc. provided a fairness opinion to Volta's board of directors. UBS Securities LLC is serving as a financial advisor to Shell, and Norton Rose Fulbright US LLP is serving as Shell's legal advisor.

Energy top investment priority - Investcorp

The latest survey from Investcorp, which was completed in partnership with IMB Business School, identified digitisation & AI, renewable energy and energy security as the three highest scoring investment trends – Electric Vehicles (EVs) and battery storage coming in at fifth - in terms of current and growing importance in the next three decades.

AI and digitisation

According to investors, AI and digitisation is recognised as the number one megatrend across all regions surveyed – Europe, Middle East and the US.

Over eight in 10 major global institutional investors stated they are currently investing in this space or will do in the future. Investors globally strongly believe that digitisation and AI will enable companies to provide solutions to pervasive problems and will enable a wave of innovation in the years to come.

Follow our column:
Smart Energy Finances: Badger acquires smart water solutions & TE Connectivity’s smart grid win
Smart Energy Finances Weekly: Elia Group outlook at negative & Adani’s smart metering subsidiary

Energy Security

Energy security was identified as a key theme for both Europe and the US, driven and exacerbated by the current conflict between Russia and Ukraine.

The conflict has dramatically increased energy and commodity prices, aggravated the post COVID-19 supply-side shock, caused additional disruption to supply chains and helped lead to a surge in inflation, all of which is being felt most strongly across European and US markets.

It has now become an imperative for Western markets to invest in domestic energy production to strengthen and ensure energy security.

Survey data suggest that investors anticipate the theme to continue well beyond the current conflict, leading to opportunities to invest in domestic energy production in Europe and beyond.

Net zero/decarbonisation and renewables

The survey highlights the lack of consensus between regions in terms of net zero, decarbonisation and renewables.

In the US and Europe, survey data suggest that these key themes are considered key investment trends that will define the next 30 years. However, the data also suggest that there is a disconnect between renewables and net zero/decarbonisation in both Asia and the Middle East.

In mind of the COP27 conference, the survey shows that there are strong regional views and opinions when it comes to net zero/decarbonisation and how quickly different regions should look to decarbonise.

In contrast, when it comes to renewables, attitudes differ given the significant investment in large-scale renewables projects underway in both Asia and the Middle East.

Varying economic considerations and energy reliance on fossil fuels across the regions explain the survey results, however, there is are clear decarbonisation opportunities in Asia and the Middle East, home to some of the largest carbon emission challenges.

Capital flow and demand

Rishi Kapoor, co-chief executive officer for Investcorp, said on the surveys findings: “Flow and demand for capital, market and sector forecasts as well as the regulatory environment are all key when thinking about future investment themes. Our most recent survey provides a great insight into how global investors are assessing and weighting the different global megatrends that are shaping the world’s markets.

“It is clear that for global investors, digitisation & AI is a key trend that will shape the global economic landscape over the long term and our data suggests that companies that leverage leading edge technologies for solving universal or critical problems are going to be as highly investible in the decades to come as they have been in recent years.

“Even though the sector has had a very difficult year it remains an attractive investment domain today and investors surveyed believe it will ride out the current macro-economic storm. This provides some hope and opportunity for growth capital and investors that predominantly invest in the technology space.”

For this and the latest news happening within the energy industry's finance and investment scene, make sure to follow Smart Energy Finances Weekly.

Also, I will walking the floors at GridTech Connect (6 February) and DISTRIBUTECH (on the 7th and 8th of February) in San Diego, California. Hope to see you there!

Cheers,
Yusuf Latief
Content Producer, Smart Energy International

Follow me on LinkedIn