Total Corporate Funding in Solar Sector Up Slightly With $6.2 Billion in Q3 2015, Reports Mercom Capital Group

Total global corporate funding in the solar sector, including venture capital/private equity (VC), debt financing, and public market financing raised by public companies, came to $6.2 billion, compared to $5.9 billion in Q2 2015.

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Raj Prabhu, CEO of Mercom Capital Group, commented, “The third quarter of 2015 has been eventful, especially in the equity markets. Although solar power demand continues to grow, solar stocks have made a complete U-turn in the last three months, affecting public market financing, which was down by about a billion dollars excluding IPOs.”

VC funding increased to $257 million in 15 deals, compared to $142 million in 24 deals in Q2 2015. Solar downstream companies continued to draw most of the VC investments with $114 million in seven deals.

Solar VC Funding Q3 2014- Q3 2015

Among the Top 5 VC deals in Q3 2015, the largest was the $105 million raised by Silicor Materials, a manufacturer of high-quality solar silicon and aluminum by-products, followed by the $80 million raised by Sunlight Financial, a provider of financing for the residential solar market. Two companies raised $25 million each this quarter; Alcazar Energy, an independent developer and power producer focused on renewable energy generation and Ampt, a provider of power conversion technologies for solar PV systems. Completing the Top 5 was HiQ Solar, a designer and manufacturer of 3-phase solar PV inverters, which raised $11 million.

A total of 21 investors participated in Q3 2015, with Infuse Ventures and Hudson Clean Energy Partners investing in three and two deals respectively.

Public market financing fell to $1.8 billion compared to $2.3 billion in Q2 2015. There were three IPOs this quarter: TerraForm Global, a yieldco subsidiary of SunEdison, raised $675 million and Sunrun, a U.S.-based residential solar company, raised $250.6 million and listed on Nasdaq. Grenergy Renovables, a Spanish solar project developer and an independent power producer, raised $4.2 million and listed on the Spanish Mercado Alternativo Bursatil (MAB).

“With yieldcos falling out of favor, their fundraising in the public markets fell by half this quarter to $802 million,” commented Prabhu.

Debt financing saw an uptick this quarter with about $4.1 billion, compared to $3.4 billion in Q2 2015. Chinese companies dominated debt financing activity, raising more than $2.9 billion compared to $1.4 billion in Q2 2015. There were three securitization deals announced in Q3, totaling $335 million, by Solar City, SunRun and AES.

Announced large-scale project funding totaled $2.5 billion in 23 deals, while Q2 2015 saw $1.9 billion in 26 deals. The Top 5 large-scale project funding deals included the $400 million debt financing secured by SolarReserve, a solar project developer, and ACWA Power, a developer and operator of water and power projects, as an investment guarantee, from the Overseas Private Investment Corporation for its 100 MW Redstone CSP Tower Project in Northern Cape, South Africa. Recurrent Energy, a solar project developer and a wholly owned subsidiary of Canadian Solar, a vertically integrated manufacturer of silicon ingots, wafers and PV cells and modules, followed with $337 million secured in construction and term debt facility for its 200 MW Tranquility Solar Project in California, from NORD/LB, Rabobank, Santander, KeyBanc, CIT and CIBC. Recurrent Energy also raised $266 million in project financing for its 100 MW Mustang Solar Project located in California, from Santander Bank and U.S. Bancorp Community Development Corporation. SunEdison, a solar energy services and technology provider, received $253 million in project financing for its 156 MW Comanche solar project in Pueblo, Colorado.

Solar Top 5 Announced Large-Scale projects Funded by Dollar Amount in Q3 2015

Aloe Energy, an owner and operator of renewable energy projects in France, secured $223.5 million in debt refinancing for its nine PV projects with a combined capacity of 69.3 MW, from Credit Agricole Corporate & Investment Bank, Siemens Bank and Societe Generale. The projects are owned by its subsidiary Delta Solar.

After two record quarters, residential and commercial solar funds announced in Q3 2015 dropped to $997 million in five deals. Out of $997 million in residential and commercial funds announced this quarter, $777 million went into the lease/PPA model and $200 million was for loan products. SolarCity raised the most funding for the quarter, bringing in $400 million. In Q2 2015, residential and commercial solar funds raised nearly $2 billion in five deals. Year-to-date, $4.8 billion has been raised, already exceeding the $4 billion in all of last year.

There were 22 corporate M&A transactions in the solar sector in Q3, compared to 17 transactions in Q2 2015.  Solar downstream companies accounted for most of the M&A transactions with 12.

The largest disclosed M&A transactions by dollar amount was led by the $2.2 billion acquisition of Vivint Solar, a provider of residential solar systems, by SunEdison, followed by the $1 billion acquisition of an 80 percent stake in Gestamp Asetym Solar, a solar PV developer and operator, from Gestamp Renewables by KKR, an investment firm. Flextronics International, a provider of design, engineering, manufacturing, real-time supply chain insight and logistics services, acquired NEXTracker, a solar tracking solution provider, for $330 million. ENGIE (formerly GDF Suez), an electric utility, acquired a 95 percent stake in Solairedirect, a solar project developer, for $222 million. Opera Investments, an investment firm formed for the purpose of acquiring a company, business, project or asset in the natural resources sector, acquired SoloPower Systems, a CIGS thin-film module manufacturer, from Hudson Clean Energy, a U.S.-based private equity and infrastructure firm, for $220 million.

There were 42 large-scale solar project acquisitions totaling $1.2 billion with about 3.9 GW changing hands, compared to 66 transactions in Q2 2015 for $2.9 billion. The top disclosed project acquisition by dollar amount was the $320 million acquisition by utility company Dominion of 50 percent of the cash equity and 99 percent of the tax equity in the 265 MW Three Cedars Solar Project from SunEdison. Abengoa Yield acquired the Solaben 1 and 6 solar projects with a combined capacity of 100 MW in the Extremadura region of Spain for $304 million from Abengoa. SunEdison acquired a 33 percent stake in a 425 MW portfolio of solar assets from Dominion Resources, an electric utility, for $300 million. United Photovoltaics Investment acquired a 100 MW solar project from Hubei Jingtai Photovoltaics Power for $137.1 million. SunPower acquired 1.5 GW of the U.S. solar project pipeline from Infigen Energy, an Australia-based renewable energy project developer, for $37.9 million.

Solar Top 5 Project Acquisitions by Dollar Amount in Q3 2015

Mercom also tracked 346 large-scale project announcements worldwide in Q3 2015 totaling 11.7 GW.