Mercom Capital Group Reports First Quarter 2011 Funding and M&A Activity for Solar

Venture capital (VC) funding in the solar sector was off to a great start for Q1 2011, coming in at $658 million in 25 deals, compared to $238 million in the previous quarter and $311 million in the first quarter of last year. The trend was similar with M&A activity amounting to $1.4 billion in 18 transactions for Q1 2011, compared to $266 million in Q4 2010 and $909 million in Q1 2010. Debt and other types of funding activities came in at $9.7 billion for the quarter with 15 deals.

“Looking at the first quarter funding activities, it is clear that VC investor’s appetite for solar has not gone away. In fact, this was the best VC funding quarter since Q2 of 2010 ($948M) and the second best quarter since Q4 of 2008,” commented Raj Prabhu, Managing Partner at Mercom Capital Group.

The top five funding deals made up for almost 70 percent the total funding in this quarter, led by a $201 million Series E raise by BrightSource Energy, a concentrated solar power company. MiaSole, a copper indium gallium selenide (CIGS) thin-film panel maker raised $106 million in Series F funding; Alta Devices, a gallium arsenide (GaAs) thin-film developer raised $72 million in a Series C; Solopower, a CIGS based flexible thin-film maker, raised $51.6 million in Series E; and Kiran Energy, a solar power project developer raised $30 million in a Series A.

Thin film companies attracted the most funding with $283 million raised in seven deals. CIGS was the most popular technology within thin films accounting for $196 million in four deals. Concentrated solar power companies raised $212 million in three deals, followed by $84 million raised by solar downstream companies in six deals.

There were 55 different VC investors that participated in 24 disclosed deals. Venture capital firms that recorded multiple rounds included Crosslink Capital, Vantage Point Venture Partners, Convexa Capital Ventures, Hudson Clean Energy Partners and Kleiner Perkins Caufield and Byers.

In continuing with last year’s trend, VC arms of companies remained active in the solar sector. These investors included Alstom, BP, GE, Chevron, Dow Chemical, Intel and Hanwha. California State Teachers’ Retirement System (CalSTRS), a pension fund, also invested in the sector this quarter.

Among countries, the U.S. was dominant in VC funding, accounting for 87 percent of all VC funding in the first quarter; 89 percent of all VC funds raised by solar companies in 2010 were also from the U.S. “When it comes to VCs investing in solar, the US continues to dominate,” further commented Raj Prabhu.

Out of $9.8 billion announced in debt and other funding, $7.6 billion came in from the Bank of China for Jinko Solar. This is a continuing trend from the last year, where Chinese government banks provided a total of approximately $34 billion in credit to Chinese solar manufacturers. There was $2.1 billion in non-Chinese debt transactions showing significant improvement in the credit markets in Q1 2011. There was only $2.2 billion in non-Chinese Debt and other funding in all of 2010.