Total Corporate Funding in Solar Sector Rises YoY with $5.3 Billion in 1H 2018
| Indian Observer Post - 14 Jul 2018

Total Corporate Funding in Solar Sector Rises YoY with $5.3 Billion in 1H 2018

Indian Observer Post

New Delhi, July 14, 2018, Total corporate funding (including venture capital funding, public market, and debt financing) in the first half (1H) of 2018 was up with $5.3 billion raised compared to the $4.6 billion raised in 1H 2017, a 15 percent increase year-over-year (YoY), says Mercom Capital Group, llc, a global clean energy communications and consulting firm, in its latest report released today on funding and merger and acquisition (M&A) activity for the solar sector in the second quarter and first half of 2018.

According to report, Corporate funding increased in Q2 2018 with $2.8 billion in 34 deals compared to the $2.5 billion in 44 deals in Q1 2018. Year-over-year funding in Q2 2018 was about 102 percent higher compared to the $1.4 billion in Q2 2017.

 “The first half of 2018 has been a roller-coaster for the solar industry marked by uncertainty due to Trump tariffs followed by the recent Chinese subsidy pullback. Though financial activity was better compared to the same period last year, the market is still sorting out the winners and losers that would come out of a potential slowdown in Chinese demand, which is expected to result in an oversupply situation and eventual price crash in components across the globe”, commented Raj Prabhu, CEO of Mercom Capital Group.

Global VC funding (venture capital, private equity, and corporate venture capital) for the solar sector in 1H 2018 was 36 percent lower with $458 million compared to the $716 million raised in the first half of 2017. 

In Q2 2018, VC funding for the solar sector increased to $298 million in 12 deals compared to $161 million in 22 deals in Q1 2018. The funding amount was 133 percent higher YoY compared to the $128 million raised in 23 deals in Q2 2017. 

Top VC deals in 1H 2018 included: $112 million raised by Wunder Capital, $100 million raised by Sunnova, $55 million secured by Off-grid Electric, Sunlight Financials’ $50 million, $25 million raised by d.light design, and the $23 million raise by Solaria. A total of 42 VC investors participated in solar funding in 1H 2018.

Solar public market funding in 1H 2018 was higher compared to the first half of 2017 with $1.25 billion raised in 12 deals compared to $934 million in 19 deals in 1H 2017, a 33 percent increase. Public market financing into the solar sector rose to $1.1 billion in eight deals in Q2 2018 compared to just $103 million in four deals in Q1 2018, and $473 million raised in six deals during Q2 2017. 

Announced debt financing activity in the first half of 2018 ($3.6 billion in 32 deals) was 22 percent higher compared to the first half of 2017 when $3 billion was raised in 33 deals. Most of that increase was due to two securitization deals: Vivint solar raised $466 million through asset back notes and Dividend Finance secured $105 million in a similar deal. 

Large-scale project funding in the first half of 2018 saw $7.96 billion announced for 98 projects compared to 1H 2017 when a record $7.4 billion was raised in 81 project funding deals.

Announced residential and commercial solar funds totaled $625 million in 1H 2018 compared to $1.8 billion in the same period of 2017.

In 1H 2018 there were a total of 46 solar M&A transactions, compared to 41 transactions in 1H 2017. There were 27 solar M&A transactions in Q2 2018. By comparison, there were 19 solar M&A transactions in Q1 2018 and 12 transactions in Q2 2017. Of the 27 total transactions in Q2, 16 involved solar downstream companies, six involved PV manufacturers, three were equipment manufacturers, and two involved BoS companies.

There were 117 large-scale project acquisitions in 1H 2018 totaling 11.6 GW compared to 101 project acquisitions totaling 10.9 GW in the first half of 2017.

Investment firms and funds were the most active acquirers in 1H 2018, picking up projects totaling 4 GW.

 

Notable India deals in Q2 2018:

Debt Funding:

  • Sunsure Energy, a solar turnkey solutions provider, raised zero-collateral based debt capital worth $2.2 million from TATA Cleantech Capital, L&T Finance, and cKers Finance.

 

Project Funding Deal:

  • Azure Power, an Indian renewable energy project developer, raised $135 million in debt financing from a consortium of development finance institutions to finance approximately 200 MW of Azure Power’s rooftop solar PV projects across India. The line of credit was led by International Finance Corporation, FMO – the Dutch development bank, Proparco, Oesterreichische Entwicklungsbank.

 

 

Project Acquisition Deals:

  • Fortum, a clean energy company, signed an agreement to sell 54% share of its solar power company operating four solar projects in India to UK Climate Investments (40%) and Elite Alfred Berg (14%). Elite Alfred Berg has the option to buy up to an additional 16% from Fortum. The total capacity of this portfolio is 185 MW. The total consideration from the divestment of the 54% stake on a debt and cash free basis, including the effect of deconsolidating Fortum's minority part of the net debt, is expected to be approximately $177 million.

M&A Deals:

  • Hinduja Group, an Indian business conglomerate, acquired Kiran Energy, a solar independent power producer. The financial details of the transaction were undisclosed.

  • Statkraft, a renewable energy developer, acquired BLP’s shares in the joint venture Statkraft BLP Solar Solutions (SBSS), a provider of hybrid solar-wind energy solutions including ground-mounted and rooftop installations, monitoring, project management, and operation and maintenance services.

  • ReNew Power, an Indian renewable energy project developer, acquired solar and wind energy project developer Ostro Energy. The acquisition is valued at close to ~$1.63 billion and was supported with the financing of $247 million from the Canada Pension Plan Investment Board.

  • The Greenko Group, an owner, and operator of solar and wind projects, acquired Orange Renewables. The deal is for an enterprise value of approximately $1.02 billion, which includes $680 million of debt which will be taken over by Greenko from Orange.

 Photo – Mercom India / ReNew Power


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