A Tale of Two Share Issues: How fossil fuel equity offerings are losing investors billions

This article originated in the Carbon Tracker on March 31, 2021.

Carbon Tracker first highlighted stranded asset risks for fossil fuel owners in 2011. Since then global fossil fuel producers, fossil fuel dependent utilities, pipelines and service companies have sold almost $640 billion worth of equity to global investors in about 2,360 stock exchange transactions managed by almost 450 investment banks.

However, globally investors have lost $123 billion on these share issuances by fossil fuel producers between 2012-2020 and thus, have significantly underperformed the general stock market amidst a long positive uptrend.

Conversely, share issuances by electric utilities, mainly those focused on renewable energy generation, have outperformed both their utility peers and the general market and gained $111 billion in value. Issuances from renewables/cleantech companies have outperformed both the general market and their renewable energy peers and gained $77 billion in value.

In this analyst note we analyse how these equity transactions have performed, how they were structured and who now owns these companies, to better understand the implications for energy producing companies both challenged by and benefitting from the transition to a low carbon economy.

We analysed fossil fuel producers – covering the oil & gas, oil & gas field services, pipelines and coal miners subsectors, and compared these to electric utilities and renewables/cleantech companies as well as the general equity market, using the MSCI All Country World Index (ACWI).

Read the full article here: https://carbontracker.org/reports/a-tale-of-two-share-issues/