Venture Capital (VC) funding in the solar sector came in at $376 million in 32 deals in Q2 2012 compared to $329 million in 34 deals in Q1 2012. Downstream companies, have received the most with $133 million in nine deals, followed by thin film companies with $121 million in four deals this quarter.
“With news of solar companies downsizing or going out of business seemingly every day, continued steady VC investment activity in the sector is good news,” said Raj Prabhu, Managing Partner at Mercom Capital Group. “Since 2011, most solar VC investments have gone to thin film companies with $835 million, and with panel prices falling more than 60 percent over the same period, solar downstream companies have been an attractive play. In this quarter we are finally seeing VC investments catch up, with downstream receiving the most funding. Balance-of-system companies also represent a significant opportunity for investment, innovation and cost reduction, and they are now the largest slice of the solar system pie, but VC investments in BOS have been surprisingly low.”
VC investment in BOS companies has totaled only $35 million this year.
The top five VC funding deals made up approximately 71 percent of the total funding in this quarter, led by a $70 million raise by CIGS thin film maker, Nanosolar. Other top VC deals included $60 million by solar lease company SunRun, and $55 million by solar energy services provider SunEdison. Other top deals were $33 million raised by thin film equipment and coating company Beneq, and $25 million each raised by microinverter company SolarBridge, and mono-crystalline silicon cell company Solexel.
There were 60 different VC investors that participated in the 32 deals. Venture capital firms that recorded multiple rounds included Crosslink Capital, Kleiner Perkins Caufield & Byers and the VC – Private Equity arm of International Finance Corporation. The United States continued to be the dominant country for VC investments, accounting for approximately 87 percent of all VC funding in the second quarter.
M&A activity in the solar sector totaled $325 million in 14 transactions. Only six of these transactions disclosed details. The top M&A transaction was the acquisition of Zhejiang Topoint Photovoltaic, a Chinese mono and polycrystalline maker, for $276 million by Guangxi Beisheng Pharmaceutical in an asset restructuring plan.
“Most of the M&A activity were small strategic transactions with a few of them being acquisitions of business divisions for synergistic reasons,” said Prabhu. “In some cases, acquisitions were of ‘sick’ companies getting rid of non-strategic businesses and assets.”
The second quarter of 2012 also saw 13 new cleantech and solar-focused investment funds announced committing $3.2 billion.
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