Mercom Capital Group Reports on Solar Funding and M&A Activity
Mercom Capital Group, llc, a
global clean energy communications and consulting firm, today released its
report on funding and mergers and acquisition (M&A) activity for the solar
sector during the third quarter of 2012.
Venture capital (VC) funding
in the solar sector in Q3 2012 was down to its lowest levels since 2008,
totaling just $72 million in 14 deals compared to $376 million in 32 deals in
Q2 2012. Twenty-six investors participated in the 14 deals in Q3, and only New
Enterprise Associates was involved in multiple deals. The leading VC deal this
quarter was concentrating photovoltaic company SolFocus with $15 million. At
the end of Q3, most of the year-to-date VC funding went to solar downstream
($258 million) and thin film companies ($246 million).
“This was the first sub-$100
million quarter for solar VC funding since 2008. It is a very challenging
market, particularly for upstream companies - good exits have become rare and
M&A deals are more and more resembling distress sales,” said Raj Prabhu,
Managing Partner at Mercom Capital Group.
Global solar installations
have been growing remarkably, Mercom noted, from just 7 GW in 2009 to a forecasted 29
GW by the end of 2012. This has been aided by significant drops in
prices of Chinese c-Si PV modules, from about $3.00/W in 2009 to current prices
of approximately $0.65-0.70/W, as well as drops in polysilicon prices from
around $200/kg in 2009 to approximately $19/kg currently. In addition, there
have been loans, credit facilities and framework agreements of about $50
billion received by Chinese manufacturers from state-owned Chinese banks which
started production, resulting in chronic oversupply leading to a further drop
in prices. Meanwhile, billions of dollars in venture funding were going to thin
film, CSP, and CPV companies in some very large deals.
Over $1 billion in VC
funding has gone into thin film companies alone since 2010. While these deals
may have made sense in years past, the quick and steep fall in of c-Si prices
have put crushing pressure on thin film companies especially, along with CSP
and CPV technologies.
The bright spot, Mercom’s
report noted, has been third party finance firms, or solar lease firms. Over $1
billion in solar residential and commercial lease funds have been raised just
in Q3 2012, and almost $2 billion in 2012 YTD. Some of the notable third party
finance firms include: SolarCity, SunRun, SunPower, Sungevity, OneRoof Energy,
Clean Power Finance, and Enfinity among others. Active investors in these funds
in 2012 include: Credit Suisse, Rabobank, Wells Fargo, Citi, and U.S. Bancorp.
In a move that highlights this trend, SolarCity filed to raise more than $200
million in an IPO on October 5.
There were 12 corporate M&A
transactions in Q3 2012, totaling $393 million with only four transactions
disclosing amounts. Two of these transactions, Q.Cells and MiaSolé, were
distressed sales. German solar cell and module manufacturer Q.Cells was acquired
by Korean conglomerate Hanwha Group for $322 million ($50 million plus $272
million debt assumption). Chinese vertically-integrated manufacturer JA Solar
acquired a 65 percent stake in Hebei Ningjin Songgong Semiconductor Co, a
wholly-owned subsidiary of the Japanese polysilicon and wafer manufacturer M.Setek,
for $39 million, and CIGS thin film company MiaSolé was acquired by the Chinese
renewables company Hanergy for $30 million.
A notable transaction this
quarter was the acquisition of Vivint by Blackstone Group for $2 billion.
Included in the transaction was the Vivint Solar division, a third party solar
finance lease firm. The valuation of Vivint Solar on its own is unknown.
For a complete list of Q3
2012 transactions in the solar sector, visit: http://mercomcapital.com/cleanenergyreports.php
Mercom Capital Group
Mercom Capital Group, llc,
is a global communications and consulting firm focused exclusively on clean
energy and financial communications. Mercom’s consulting division advises
cleantech companies on new market entry, custom market intelligence and overall
strategic decision-making. Mercom’s consulting division also delivers highly
respected industry market intelligence reports covering Solar Energy, Wind
Energy and Smart Grid. Our reports provide timely industry happenings and
ahead-of-the-curve analysis specifically for C-level decision making. Mercom’s
communications division helps clean energy companies and financial institutions
build powerful relationships with media, analysts, government decision-makers,
local communities and strategic partners. For more information about Mercom
Capital Group, visit: http://www.mercomcapital.com.
To get a copy of Mercom’s popular market intelligence reports, visit: http://mercomcapital.com/market_intelligence.php.
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