European sustainable aviation deals return to centre-stage as rates fall — Dealspeak EMEA
Deals in Europe’s nascent sustainable aviation fuel (SAF) industry fell to a decade-long low last year but there are signs that investors are taking an interest in the sector as central banks continue to cut rates.
Volumes hit a ten-year low of EUR 11.4bn over 78 deals in 2024, according to Mergermarket data, 48% lower than 2023, when 93 deals worth EUR 21.7bn crossed the line.
The 2022 total was the second-lowest level of the decade. The high watermark came in 2015, with EUR 87.7bn across 208 transactions.
However, the mood might be changing as global interest rates fall. KKR [NYSE:KKR] shone a light on the potential of SAF in October when it agreed to pay EUR 2.9bn for a 25% stake in Enilive, a unit of energy group Eni [BIT:ENI] that specialises in biorefining, biomethane production, and smart mobility solutions. Enilive has a SAF business.
“Sustainable aviation fuel will be an interesting area for European dealmakers in 2025,” according to Florian Mahler, a Dusseldorf-based partner with Clifford Chance, and co-head of the firm’s Worldwide Projects Group.
Opportunity costs in focus
Investment in transformative tech, including SAF, is often negatively correlated with interest rates: cheap money encourages more speculative plays, while higher rates concentrate minds on comparisons with safer bets.
Although the calculation of opportunity costs changes, according to the macroeconomic scene, the fundamental case for SAS investment appears solid. Aviation accounts for around 2.5% of global emissions, although there is a risk of this growing as the percentage of the world population able to afford flights gradually increases.
The European Union (EU) has set ambitious targets for SAF usage within the bloc to tackle the challenge. It wants 70% of jet fuel to be sustainable by 2050, with a target of 2% this year.
Regulatory support will provide incentives for heavy investment in SAF tech in the years ahead. Haffner Energy [EPA:ALHAF], a clean fuels developer based in France, has calculated that the total investment in the global SAF industry will be around USD 1trn by 2050.
SAF and sound
Mergermarket intelligence identifies a number of opportunities in European SAF deals along the value chain.
At the smaller end of the scale, Finnish firm Voima Ventures has closed its EUR 100m+ Fund III. It aims to support science-driven unicorns with initial tickets of up to EUR 3m alongside significant follow-on investments.
The fund will make 25-30 investments, with eight already closed. One of these is in Liquid Sun, a Finnish SAF company that raised EUR 4m at the end of November. The start-up has plans to make Finland a key market for industrial SAF production.
Meanwhile, Haffner Energy is seeking investors for its new subsidiary SAF Zero, co-founder, Chairman, and CEO Philippe Haffner told Mergermarket in October. The company aims to retain a minority stake as it pursues deals with airlines and plane manufacturers, as well as project developers, infrastructure investors, technology partners, and specialist funds.
Elsewhere in France, Ascendance Flight Technologies, a Toulouse-based SAF company, will begin evaluating acquisitions next year following a Series B round of up to EUR 100m, Jean-Christophe Lambert, co-founder and CEO, told Mergermarket in November. The company has secured EUR 60m since 2018, with EUR 40m coming in its last financing round in 2023.
Falling interest rates, strong regulatory support, and massive investment needs, should combine to make SAF a key theme for European dealmakers this year.