Mercom Capital Group reports Solar Q2 2014 funding

Mercom Capital Group, a global clean energy communications and consulting firm, released its report on second quarter funding and mergers and acquisitions (M&A) activity for the solar sector in 2014.

Total global corporate funding in the solar sector, including venture capital (VC), private equity (PE), debt financing, and public market financing raised by public companies, came in at US$6.3 billion, compared to US$7 billion in Q1 2014. This quarter also saw two IPO’s including one yieldco and a securitization deal.

Raj Prabhu, CEO of Mercom Capital Group, commented, “It was a solid quarter for the solar sector in terms of fundraising. VC funding was up, public markets remained strong and we are seeing new and innovative financial structures. Residential/commercial solar funds continue to raise record amounts.”

VC

Global VC funding, including PE and corporate VC, in Q2 2014 totaled US$432mn in 21 deals, up from US$251mn in 26 deals in Q1 2014, mostly due to three large deals. Solar downstream companies attracted most of the VC funding this quarter, with US$388mn in 10 deals.

The largest VC/PE deal in Q2 2014 was the US$150mn raise by Sunrun, a provider of residential solar-power systems. Investors included Foundation Capital, Accel Partners, Sequoia Capital, Madrone Capital, and others. Sunnova Energy, a provider of residential solar services, raised US$145mn. Other Top 5 deals included the US$72.5mn raised by residential solar installer Sungevity, followed by Siva Power (formerly Solexant), a manufacturer of CIGS solar modules, which raised US$15mn. Brite Energy Solar, a provider of residential and commercial solar services, raised US$14.2mn.

Project Funding

There were 33 large-scale project funding deals totaling US$3.5 billion announced in Q2 2014. The Top 5 large-scale project funding deals in Q2 2014 included the US$820mn raised by Megalim Solar Power for a 121 MW CSP project in Israel, Tenaska’s US$450mn raise for the development of the 150 MW Tenaska Imperial Center West solar project in California, the US$290mn raise by First Solar for its 141 MW Luz del Norte solar project in Chile, the US$190mn raise by SunEdison for the 72.8 MW Maria Elena solar project in Chile, and the US$142mn raise by Abengoa for its 100 MWXiNa Solar One CSP project in South Africa.

Third-party Funds

Third-party residential and commercial solar funds continued to attract significant attention, with more than US$1.3 billion raised in Q2 2014. SunPower topped the list, raising US$492mn in three different funds. Investors included Google, Admirals Bank and Hannon Armstrong Sustainable Infrastructure Capital.

Corporate M&A

There were 25 corporate M&A transactions in the solar sector in Q2, down from 38 transactions in Q1 2014.  Solar downstream companies were involved in most of the M&A transactions with 11.

The largest disclosed M&A transaction by dollar amount was the US$350mn acquisition of Silevo, a solar cell and PV module manufacturer, by SolarCity. This was followed by the US$29mn acquisition of Zhejiang Ruixu Investment Company, a solar project development company and wholly-owned unit of ReneSola, by Jiangsu Akcome Solar Science & Technology Company. Jun Yang Solar Power Investments, an independent power producer, acquired the remaining 32.1 percent of Jun Yang Holdings, from Sun Reliant International, a wholly owned subsidiary of Hanergy Solar, for US$14mn. RBI Solar, a provider of solar mounting systems, acquired Renusol, a subsidiary of CENTROSOLAR Group, for US$3.5mn. Rounding out the Top 5 was the acquisition by Jinzhou Yangguang Energy, a wholly-owned unit of Solargiga Energy, of an additional 10 percent stake in PV module manufacturer Jinzhou Jinmao Photovoltaic Technology from Kinmac Holding, raising its stake to 96 percent, for US$2.2mn.

Project Acquisitions

Project acquisitions in Q2 2014 totaled US$229mn in 34 transactions with 1.1 GW changing hands. The top disclosed project acquisition by dollar amount was Foresight Solar Fund Limited’s acquisition of SunEdison’s 17.8 MW Castle Eaton solar project in Castle Eaton, UK, for US$37.6mn. This was followed by the sale of the 19.5 MW Great Glemham solar project in Suffolk, UK, by BayWa to Allianz Renewable Energy Fund, an Allianz Capital Partners fund, for US$35.7mn. Bluefield Solar Income Fund, an investment company focusing on large scale agricultural and industrial solar assets, acquired the 17.5 MW Hertfordshire solar projects from Solarcentury for US$32.5mn, and ContourGlobal, an independent power producer, acquired a 5 MW solar portfolio in Italy from Sorgenia Solar for US$27.5mn. Rounding out the Top 5 was another transaction from Foresight Solar Fund Limited, which acquired the 12.2 MW Highfields solar project in Essex, UK, for US$26.3mn from SunEdison.

Mercom also tracked 150 large-scale project announcements worldwide in Q2 2014 representing 7.6 GW.