Apr 13, 2015

Total Corporate Funding in Solar Sector Comes in at $6.4 Billion in Q1, VC Funding Down, Record $1.9 Billion Raised by Residential and Commercial Solar Funds, Reports Mercom Capital Group

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 the first quarter of 2015.
 
Total global corporate funding in the solar sector, including venture capital/private equity (VC), debt financing, and public market financing raised by public companies, almost doubled with $6.4 billion, compared to $3.4 billion in Q4 2014.
 
Raj Prabhu, CEO of Mercom Capital Group, commented, “There was record fundraising this quarter by residential and commercial solar funds as the ITC expiration draws closer. Project acquisition activity remained strong with yieldco’s acquiring almost 20 percent of the projects.”
 
VC funding fell to $189 million in 26 deals, compared to $315 million in 16 deals in Q4 2014. Solar downstream companies continued to attract most of the VC funding with $112 million in 12 deals.
 
 
 
Among the Top 5 VC deals in Q1 2015, the largest was the $45 million raised by Conergy, a solar-downstream company providing project development, financing, EPC and O&M services, from RWE Supply & Trading and Kawa Capital Management. Other top deals included the $25 million raised by NEXTracker, a designer and manufacturer of single axis PV trackers, from SJF Ventures, Tennenbaum Capital Partners, Sigma Partners and DBL Investors. Fenix International, a manufacturer of mobile payment-enabled solar charging systems to off-grid African communities, raised $12.6 million from GDF Suez, Schneider Electric, Orange France Telecom, clean tech entrepreneurs Tom Dinwoodie and Warner Philips, and other investors. M-KOPA Solar, an asset financing company that sells solar home systems to off-grid households on a mobile money payment plan in Kenya, Tanzania and Uganda, raised $12.45 million from LGT Venture Philanthropy, Lundin Foundation, Treehouse Investments and Blue Haven Initiative. Oxford Photovoltaics, a spinoff from Oxford University and a developer of thin-film perovskite solar cell technology, raised over $12.3 million from Oxford University, MTI Partners, Longwall Venture Partners, Parkwalk Advisors and other angel investors.
 
A total of 33 VC’s invested in Q1 2015, with DBL Investors and Tenaska participating in two deals each.
 
Public market financing came to $1.3 billion compared to $1.6 billion in Q4 2014. There was one IPO this quarter: SolarEdge a balance-of-system company, raised $126 million and is listed on Nasdaq.
 
Debt financing increased substantially this quarter with almost $5 billion, compared to $1.5 billion in Q4 2014. Over two billion  of that went to SunEdison and its yieldco Terraform Power.
 
Announced large-scale project funding totaled $2.5 billion in 29 deals, while Q4 2014 saw $3.4 billion in 33 deals. The Top 5 large-scale project funding deals included the $660 million secured by Abengoa, for its 100 MW Xina Solar One CSP project located in South Africa, followed by the $344 million loan raised by ACWA Power for its 200 MW Mohammed bin Rashid Al Maktoum Phase II solar project in Dubai. Solairedirect’s $194.4 million in financing for the construction of a portfolio of 13 solar projects of 136.8 MW in France, Shams Ma’an Power Generation PSC’s raise of $129 million for its 52.5 MW Shams Ma’an solar PV project located in Jordan, and Penn Energy Renewables’ $125 million for its three projects in Canada, with an aggregate capacity of 37 MW were the other deals in the Top 5.
 
 
This was a record quarter for residential and commercial solar funds with $1.9 billion raised in 10 deals, the highest amount in a quarter. Of this total, $200 million went to a loan fund while the rest went to third-party lease or PPA funds. SolarCity accounted for a major portion of this total. In Q4 2014, residential and commercial solar funds raised $1 billion in eight deals.
 
 
There were 29 corporate M&A transactions in the solar sector in Q1, compared to 21 transactions in Q4 2014.  Solar downstream companies accounted for most of the M&A transactions with 20.
 
The largest disclosed M&A transactions by dollar amount was led by the $265 million acquisition of Recurrent Energy, a solar project developer, by Canadian Solar, followed by the $198 million acquisition of Hanergy Thin-Film Power Group’s 600 MW Business Integrated Photovoltaic production line by Macrolink New Resources. EGCO Group acquired an additional 33.33 percent stake in Natural Energy Development (NED), a solar project developer, from Diamond Generating Asia, for $37 million, making EGCO Group the majority shareholder of NED with 66.66 percent of the shares. SPI China (HK) acquired 80 percent of Solar Juice, an Australian solar PV wholesale distributer, for $25.5 million. Global EcoPower acquired NOVA Power, a solar project developer, for $15.4 million.
 
There were 44 large-scale solar project acquisitions totaling $953 million with about 2 GW changing hands, compared to 49 transactions in Q4 2014 for $898 million. The top disclosed project acquisition by dollar amount was Lightsource Renewable Energy’s acquisition of 14 U.K. solar assets totaling 34.2 MW for $155 million. TerraForm Power acquired solar projects totaling 168 MW from SunEdison for $110 million. Capital Stage acquired a 53.4 MW PV portfolio consisting of seven solar projects in the UK for $104.3 million. Bluefield Solar Income Fund acquired a 49.9 MW solar PV project based in Norfolk for $84 million from Trina Solar Luxembourg (EU) Systems, and three UK-based solar projects totaling 48 MW for $83 million from WIRSOL Energy.
 
 
Mercom also tracked 190 large-scale project announcements worldwide in Q1 2015 representing 7 GW.
 
 
Mercom Capital Group