Mercom Capital Group, llc, a global clean energy communications and consulting firm, released its report on funding and merger and acquisition (M&A) activity for the solar sector in 2013. Global venture capital (VC) investments dropped 40 percent to $600 million in 97 deals in 2013 compared to $992 million in 106 deals in 2012. Total corporate funding into the solar sector, encompassing VC, debt and public market financings was up 25 percent in 2013 to almost $10 billion, compared to about $8 billion in 2012.
VC funding in Q4 2013 totaled $87 million in 24 deals compared to $197 million in 28 deals in Q3 2013.
Since mid-2012 the new normal for VC funding has been smaller funding quarters and smaller deal sizes. “While venture funding levels were down, overall fundraising was up and public market financings were really strong in 2013,” said Raj Prabhu, CEO of Mercom Capital Group. “Higher valuations among public solar companies have opened up the capital markets again as an avenue for fundraising at attractive terms. IPOs are back.”
Solar downstream companies saw the largest amount of VC funding in 2013 with $262 million in 34 deals, accounting for 45 percent of venture funding. Investments in CSP reached $109 million in 12 deals and PV companies were close behind with $104 million in 17 deals. Thin film saw a 77 percent drop in funding from 2012, with $72 million in 2013 compared to $314 million a year earlier.
The Top 5 VC-funded companies in 2013 were Chinese solar project developer Heifei Golden Sun Technology, which raised $69 million; followed by Clean Power Finance, a provider of third party financing for distributed PV projects, which raised $62 million; Solexel, a developer of high-efficiency crystalline silicon solar modules, brought in $55 million; Sungevity, a provider of residential solar installations, raised $43 million; and OneRoof Energy, a developer and operator of residential solar energy generation systems, raised $30 million.
The most active investor in terms of deal numbers was New Enterprise Associates, investing in three companies. New Enterprise Associates was also the top investor in 2012 with four deals. This was followed by Kleiner Perkins Caufield & Byers, PACA Investment, Firelake Capital Management, CCM US, and VisionRidge Partners all investing in two companies each.
Public market financings jumped considerably to $2.8 billion in 39 deals in 2013, up from just $893 million in 23 deals in 2012. In 2013, there also were seven IPOs that together brought in more than $1 billion.
Large-scale project funding announced in 2013 amounted to $13.6 billion in 152 deals, compared with $8.7 billion in 84 deals in 2012. Announced large-scale project funding in Q4 2013 jumped as well, with $6 billion in 46 deals. The largest project funding deal announced in 2013 was the $1 billion bond financing completed by Solar Star Funding for its Solar Star 1 and Solar Star 2 projects. Top investors in large-scale projects were Kasinkornbank with 15 projects, and Bank of Tokyo-Mitsubishi UFJ with 10 projects.
Residential and commercial lease funds showed strong growth in 2013, with 22 announced funds totaling $3.34 billion, a 69 percent increase over 2012. Almost $1 billion was raised in Q4 2013 alone. Vivint Solar, SolarCity, Sunrun, SunPower, and SunEdison were top fundraisers in 2013.
The fourth quarter of 2013 was a very active quarter for large-scale project development around the globe. Mercom tracked about 220 project announcements totaling almost 9 GW in the quarter.
Corporate M&A activity in solar amounted to $12.7 billion in 81 transactions compared to $6.7 billion in 51 transactions in 2012. M&A deal activity was up 59 percent in 2013 largely driven by strategic acquisitions and acquisitions of distressed assets. The largest M&A transaction in 2013 was the $9.4 billion acquisition of Tokyo Electron by Applied Materials, followed by ABB’s acquisition of Power-One, for approximately $1 billion. Shunfeng Photovoltaic International, acquired Wuxi Suntech Power, the main Chinese unit of Suntech Power Holdings, for $489 million, and Goldpoly New Energy Holdings acquired China Merchants New Energy Holdings in a non-cash transaction valued at $273 million. Dow Corning acquired Mitsubishi’s 12.5 percent stake in Hemlock Semiconductor LLC, giving it 100 percent ownership, and 12.5 percent in Hemlock Semiconductor Corporation, giving it 80.5 percent ownership.
Solar project M&A amounted to $1.7 billion in 2013, compared to $1.9 billion in 2012. Activity was up 20 percent year-over-year, with 112 transactions in 2013, compared to 80 transactions in 2012. Good solar projects with sound economics are in great demand.
Announced debt funding in 2013 totaled $6.2 billion in 38 deals, compared with $6.9 billion in 34 deals in 2012, and nearly $20 billion in 41 deals in 2011. The most active provider of credit in 2013 was China Development Bank, which provided debt funding for five Chinese solar companies. Since 2010, announced Chinese bank loans, credit facilities and framework agreements to Chinese solar companies have reached $53.6 billion. For the first time since 2010, debt raised by non-Chinese companies exceeded those raised by Chinese companies via Chinese banks.
Mercom tracked 28 solar companies that filed for insolvency or bankruptcy protection over the course of 2013. More than 60 percent of these companies were manufacturers, accounting for 18 of the 28. European companies continued to struggle with bankruptcies and insolvencies.
To learn more about the report, visit: http://store.mercom.mercomcapital.com/products-page/solar-reports/2013-solar-annual-and-q4-funding-report/
Mercom Capital Group, llc