Solar Sector Sees $207 Million in VC Funding, Strong Project Funding and M&A Activity in Q3 2013, Reports Mercom Capital Group

Global venture capital (VC) funding in Q3 2013 totaled $207 million*, up slightly from the $189 million raised in Q2 2013. VC funding was distributed across technology groups this quarter with PV companies receiving the most, $57 million.

Solar VC Funding Q3 2013

Total corporate funding in the solar sector, including VC, debt financing and other equity financings raised by public companies, was significantly higher $2.18 billion, compared to $915 million in Q2 as a number of public companies took advantage of rising market values this quarter.

Raj Prabhu, CEO of Mercom Capital Group, commented, ”Overall market conditions for the solar sector continue to improve. Project funding and M&A activity were at record levels reflecting an improved demand outlook. Taking advantage of rising market values, we also saw significant financing activity among publicly-traded companies this quarter.”

The largest VC deal in Q3 2013 was the $39.9 million raised by Solexel, a developer of high-efficiency crystalline silicon solar cells and modules. Investors included Technology Partners, DAG Ventures, Northgate Capital, GSV Capital, KCPB Holdings and SunPower. CSP project designer and developer eSolar raised $22 million from Oak Investment Partners.

Solar Top VC Deals in Q3 2013

Solar M&A activity increased in Q3 2013 both in transactions and dollars, totaling $9.8 billion in 23 transactions compared to $1.3 billion in 18 transactions in Q2. Most of this quarter’s M&A activity was either strategic or acquisitions of distressed assets/companies/technologies on the cheap.

Clean Power Finance, a provider of third-party financing for distributed PV projects through its software platform, raised $20 million from UAE Fund, followed by HelioVolt, a manufacturer of thin-film (CIGS) solar modules, which raised $19 million from SK Group.

Third-party solar finance companies raised $584 million in disclosed residential and commercial project funds in Q3 2013. Announced solar lease funding comes to $2.4 billion YTD.

Top 5 Solar M&A Transactions in Q3 2013

Though not a pure-play solar transaction, Applied Materials’ $9.4 billion acquisition of Tokyo Electron accounted for most of the quarter’s total. Included in the acquisition was Tokyo Electron’s amorphous silicon equipment business. Other top M&A transactions included: the acquisition of LDK Solar’s Hi-Tech (Hefei), a vertically-integrated manufacturer of PV products, by China’s Tongwei, a polysilicon manufacturer, for $142 million; SolarCity, a solar installation and lease company, acquired direct sales company and channel partner Paramount Solar for $120 million; and First Solar, an integrated manufacturer and developer of PV systems using its cadmium telluride (CdTe) thin film technology, acquired GE’s global CdTe solar intellectual property portfolio for 1.75 million shares of First Solar common stock (~$84 million). Shanghai Ronglian Leasing, a Chinese leasing company, acquired Shunfeng Technology, a unit of Shunfeng Photovoltaic International (a manufacturer and developer of solar equipment), for $49 million.

There were 37 announced large-scale project funding deals (almost 1,267 MW) in Q3 2013 totaling $2.89 billion. Mercom also tracked about 5.5 GW of new announced large scale projects in various stages of development worldwide.

There were about 3,000 MW of projects that changed hands in Q3 2013. The Top 5 project acquisitions by project size included First Solar’s acquisition of Element Power’s solar development project pipeline (1,500 MW). The second largest transaction was for the acquisition of 400 MW of solar projects from a consortium of companies led by GD Solar by Goldpoly New Energy. Goldpoly also acquired 300 MW in solar projects from Zhongli Talesun Solar through its wholly-owned subsidiary China Solar Power Group. The fourth largest transaction by project size was First Solar’s 250 MW acquisition of the Moapa Solar Project from K Road Power. Rounding out the Top 5 was the acquisition by Rainy River First Nations and Fiera Axium Infrastructure Canada II of Seven Canadian Solar projects totaling 67 MW from Global PVQ.

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Image credit: Reuters