Automotive Newsletter Q1 2023
Overview of M&A Activity
Recent reports from the automotive industry have shown positive signals regarding production and sales expectations for 2023, due to the improving but still ongoing semiconductor supply chain issues. Although the overall situation has improved, OEMs are struggling to source sufficient components to tackle the issue of long waiting lists. The main factors for reduced production capabilities are the shortage of semiconductors and the continuing war in Ukraine.
M&A activity is confirming the positive dynamics of the market with a strong increase in Q1 2023 compared to Q1 2022, from 61 to 116
In terms of deal numbers, M&A activity is confirming the positive dynamics of the market with a strong increase in Q1 2023 compared to Q1 2022, from 61 to 116. However, the cumulative deal value has declined slightly in Q1 2023 compared to Q1 2022, with €14.4bn against €18.8bn. Activity in the M&A environment is mainly driven by the areas of interior systems, EV-Charging, and powertrains with investments in companies such as DeepDrive, Envisics, Windsor, A2Mac1, and innoelectric.
Valuation multiples across Europe are still on the rise in Q1 2023, compared to Q4 2022. In Europe, EV/Sales, EV/EBITDA, and EV/EBIT multiples increased by 2.1%, 3.3%, and 0.5% respectively in Q1 2023. An even more positive picture can be observed in Asia, where EV/Sales, EV/EBITDA, and EV/EBIT multiples rose by 12.4%, 12.8%, and 20.4%. The North American market is the only one showing a negative trend, with EV/Sales, EV/EBITDA, and EV/EBIT multiples declining by 8.9%, 1.1%, and 4.5% in Q1 2023.
The continuing uncertainties in the automotive industry have not impacted the growing interest in fully electric (EV), plug-in hybrid (PHEV), or hybrid vehicles. The move forward electrifying the vehicle sector is expected to gain additional momentum in 2023, supported by government initiatives to ban internal combustion engine vehicles and meet targeted climate goals. Additionally, car producers are accelerating their efforts to implement cutting-edge technologies, moving from touch controls to haptic feedback and voice commands with artificial intelligence-based digital assistants, to attract more young drivers in the future.
M&A Activity: Quarterly Comparison Q1 2022 – Q1 2023
Top M&A Deals Q1 2023
- DeepDrive GmbH, the Germany- based provider of a new modular powertrain platform for e-vehicles, received €15m in a Series A funding round from an investment consortium led by BMW i Ventures. The funds received will be used to ramp up DeepDrive’s industrial production and continued personnel growth.
- Envisics Ltd, the UK-based developer of holographic technologies for augmented reality head-up displays and automotive sensor systems, received an investment representing a 10% stake from an investor group led by Hyundai Mobis. The investment will enable Envisics to accelerate product development and delivery.
- Windsor Mold Inc, the Canada-based manufacturer of complex tooling for injection moulded exterior and interior parts, lighting moulds, and optic inserts, was acquired by ABC Technologies, the Canada-based automotive supplier of technical plastics and lightweight technologies. The transaction will strengthen ABC’s exterior products offering while expanding its injection moulding, technical expertise, and bringing additional value-added tooling in-house.
- A2Mac1 Group, the French-based provider of benchmarking services for the automotive industry, was acquired by Providence Equity Partners, a US-based investment manager, and the existing management. The investment will further strengthen existing growth paths and development efforts.
- innolectric AG, the Germany-based provider of onboard fast charging technology for electric commercial vehicles, was acquired by Bel Fuse, the US-based manufacturer of electronic components. The transaction will improve innoelectric’s global market reach and strengthen Bel Fuse’s ongoing e-mobility strategy.
Selected Recent Global Automotive Bond Issuances Q1 2023
|Company||Date of Issuance||Amount (in €m)||Coupon (in %)||Yield (Latest)||Price (Latest)||Maturity Date|
|Magna International Inc.||17.03.2023||550.0||4.38%||4.00%||102.7||17.03.2032|
|Pirelli & C. S.p.A.||18.01.2023||600.0||4.25%||4.10%||100.4||18.01.2028|