Most large banks have strong power & utilities groups, so you can’t go wrong with any of them. You have a small advantage if you have a relevant background, such as experience at a power or infrastructure company or in the public sector, but it won’t make a night-and-day difference. There’s nothing special to note here because power & utilities investment banking is a moderately specialized group (at best). Recruiting into Power & Utilities Investment Banking While there is overlap between power & utilities, infrastructure, oil & gas, and renewables, the industry structure and drivers are quite different, so we’re treating it as a separate group. It’s also a highly localized industry, with many companies serving specific countries, states/provinces, and cities, and many operating “local monopolies.”ĭifferent banks classify their power & utilities groups differently.įor example, Goldman Sachs puts it in “Natural Resources” or “Public Sector and Infrastructure,” JP Morgan puts it in “Energy,” it’s a separate group at Morgan Stanley, and there’s a “Power, Utilities & Renewables” group at Bank of America. The power & utilities sector has lower volatility than others because electricity, gas, and water are necessities for modern life.Ĭompanies tend to offer high, stable dividend yields, and they finance their massive capital expenditures primarily with debt, with the highest leverage ratios of any industry outside of financial institutions. ![]() They are also highly regulated and tend to be vertically integrated. Utility companies might generate their own power, but they could also buy some from power companies, and they focus on the transmission and distribution steps. They are often unregulated and do not focus on the transmission or distribution aspects. Power companies generate power (from fossil fuels, renewables, and nuclear) and sell it wholesale to utilities companies and other customers. ![]() Of these verticals, electricity is easily the most important one ~90% of publicly traded utility companies are involved in electricity in some way. The “classification tree” is simple because this sector is quite narrow: In the distribution process, the voltage is “stepped down” by transformers and sent to homes and businesses. “distribution,” transmission is the part of the process where electricity is sent from power generation sites over long distances at high voltage levels to substations that are closer to people and businesses. If you’re wondering about “transmission” vs. Power and Utilities Investment Banking Definition: In power/utilities IB, bankers advise companies that produce, transmit, and distribute electricity, natural gas, and water on raising debt and equity and completing mergers and acquisitions. We’ll get into these fun developments, but I want to start with the basic definitions: Power & Utilities Investment Banking Defined That is still true for the average company in the industry: it is more defensive than something like technology or financial institutions.īut over time, trends like market liberalization, deregulation, the shift to renewables, and the ESG religion “movement” have shaken up a sleepy sector. ![]() Traditionally, the sector was viewed as a defensive play for investors who wanted stable dividends and no drama. The power & utilities investment banking team has a reputation for being “boring.”
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