The Canadian infrastructure and energy M&A landscape is buzzing with activity as 2025 kicks off, reflecting a voracious appetite from buyers and sellers alike. With a strong foundation of 39 deals in 2024 and an impressive $22B in deal value projected for 2025, the stage is set for a dynamic year. However, the shadow of U.S. tariffs and potential Canadian retaliations looms large, injecting a dose of uncertainty into the market. This political tug-of-war could spark a wave of defensive acquisitions, reshaping the deal landscape in unpredictable ways.
The trend towards megadeals, as seen in Neoen’s $14B acquisition and CDPQ’s $10B deal for Innergex, is poised to continue. These high-value transactions are not just about size; they signal a strategic shift towards platform deals, where investors focus on companies with a pipeline of assets. This approach could foster long-term growth and stability in the sector, even as political headwinds persist.
Renewables remain a hot ticket, with Canada’s electrification goals driving sustained interest despite external pushback. The sector’s 31% share of infrastructure M&A activity in 2024 speaks volumes about its enduring appeal. Deals like Sitka Power’s acquisition of Saturn Power’s assets and Connor, Clark & Lunn Infrastructure’s investment in Ontario wind projects underscore this trend. Yet, the renewables sector must grapple with the reality of potential market downturns and political resistance, testing its resilience and adaptability.
Data centres are emerging as a significant growth area, with federal and provincial initiatives fuelling investment. Equinix’s $15B joint venture and Pembina Pipeline’s investment in a natural gas power plant for data centres highlight this trend. As digital infrastructure demands surge, so too will the need for energy to power these hubs, creating a symbiotic relationship between tech and energy sectors.
Transportation assets are gaining traction, with a 28% uptick in activity. Notable deals like Cando’s acquisition of the Enterprise terminal and the sale of Mobil Grain Ltd. demonstrate robust interest in rail, ports, and roads. This trend dovetails with the broader infrastructure push, as Canada seeks to modernize its transport networks to meet growing demand.
Transmission and distribution assets are also poised for growth, with Ontario’s Hydro One and Axium Infrastructure making significant moves. As electricity demand climbs, investments in these areas will be crucial for Canada’s energy security and sustainability goals.
The shifting sands of investment policies in both the U.S. and Canada add another layer of complexity. Dealmakers must navigate these political currents, factoring in the potential impacts of “America First” policies and stricter foreign investment reviews. This could lead to more creative deal structures and strategic partnerships, as investors seek to mitigate risks.
Looking ahead, the momentum in infrastructure and energy M&A is undeniable. Yet, the sector must confront significant challenges, from political uncertainty to market volatility. How dealmakers respond to these pressures will shape the future of Canada’s energy landscape. Will defensive acquisitions become the norm? Will the renewables sector continue to thrive despite headwinds? And how will the interplay between tech and energy sectors evolve in the face of surging data centre demand?
These questions underscore the high stakes and complex dynamics at play. As Canada strives to balance energy security, sustainability, and economic growth, the infrastructure and energy M&A sector will be a critical battleground. The actions of dealmakers today will reverberate through the economy for years to come, making this a space to watch closely. With each deal, the sector’s future takes shape, revealing a tapestry of innovation, resilience, and strategic maneuvering.
