Mercom Capital Group, llc. (Austin, TX, U.S.) on October 10th, 2016 released its report on funding and merger and acquisition (M&A) activity for the solar sector in the third quarter of 2016.
Total corporate funding, including venture capital, public market and debt financing into the solar sector in Q3, 2016 was up to about USD 3 billion in 45 deals, compared to the USD 1.7 billion in 32 deals in Q2, 2016.
Mercom tracked 185 new large-scale project announcements worldwide in Q3, 2016 totaling 9.2 GW.
“Funding levels bounced back across the board compared to a weak Q2, but they are still well below last year’s totals,” commented Raj Prabhu, CEO and Co-Founder of Mercom Capital Group.
“The combination of slower than expected U.S. demand, the overcapacity situation coming out of China, and global hyper-competitive auctions leading to lower margins has affected the entire supply chain and most of the solar equities are in the red year-to-date. The exception has been the rebound of some of the yieldcos.”
VC funding for the solar sector almost doubled in Q3, 2016
Global VC funding (including private equity) for the solar sector almost doubled in Q3, 2016 with USD 342 million in 16 deals compared to the USD 174 million raised in the same number of deals in Q2, 2016.
Solar downstream companies raised USD 273 million in eight deals compared to USD 112 million in seven deals in Q2, 2016. The largest share came from the USD 220 million raised by Solar Mosaic, a provider of residential solar loans, from Warburg Pincus, Core Innovation Capital and Obvious Ventures.
Other top VC deals this quarter included the USD 47 million raised by Heliatek, USD 20 million raised by BBOXX, USD 15 million raised by d.light, and the USD 10 million each raised by Morgan Solar and Off-Grid Electric.
Q3, 2015 public market financing totaled USD 1.8 billion
Solar public market financing in Q3, 2016 came to USD 880 million in five deals, including one IPO, compared to USD 179 million in four deals in Q2, 2016. In Q3 of 2015, public market financing totaled USD 1.8 billion.
The first solar IPO this year was recorded by BCPG (Bangkok), a solar downstream company for USD 166 million.
Debt financing came to almost USD 1.8 billion in 24 deals in Q3, 2016 compared to 12 deals in Q2, 2016 for USD 1.3 billion. Year-over-year, USD 4.1 billion was raised in 22 deals in Q3, 2015.
Top large-scale project funding deal include Magnetar Capital, Sinogreenergy, SunPower, and FRV
The top large-scale project funding deal this quarter was Magnetar Capital’s raise of USD 397 million to refinance its 135 MW UK solar projects portfolio.
Sinogreenergy raised USD 200 million to develop a portfolio of up to 550 MW of solar projects in Taiwan.
SunPower secured a USD 199.7 million syndicated loan for its 100 MW Pelican Solar Project in Chile. Gunkul Engineering secured USD 115.8 million in a syndicated loan for the construction of the 31.75 MW Sendai Okura solar project in Japan.
Fotowatio Renewable Ventures (FRV) received USD 103.4 million in project financing for the 50 MW solar PV project in northern Jordan.
Residential/commercial funds bring in USD 1.1 billion
Residential and commercial solar funds raised in Q3, 2016 came to USD 1.1 billion in five deals compared to USD 1.36 billion in 11 deals in Q2, 2016.
Of the USD 1.1 billion announced this quarter, USD 760 million went towards lease and USD 333 million went to loan funds. So far this year, close to USD 3.5 billion has been raised in 22 deals. During the same period last year, more than USD 5 billion was raised in 21 deals.
There were 18 solar M&A transactions in Q3, 2016 compared to 17 in the previous quarter. Solar downstream companies accounted for half of the transactions (nine), followed by manufacturers with five. Four acquisitions involved SunEdison companies this quarter as a result of the company filing for bankruptcy and selling off parts of its business.
About 2.6 GW of solar projects acquired in Q3, 2016
There were 55 large-scale solar project acquisitions (24 disclosed for USD 1.3 billion) compared to Q2, 2016 which had 38 transactions (13 disclosed for USD 1.9 billion). About 2.6 GW of solar projects were acquired in Q3, 2016 compared to 2 GW in the previous quarter.
The largest disclosed transaction was the USD 218 million acquisition of a 24 percent stake in Desert Sunlight Investment Holdings’ 550 MW solar project in California (called Desert Sunlight Solar Energy Center) by NextEra Energy Partners.
Solar Partnership Capita, acquired 152 MW of solar projects from Sky Solar Japan for USD 165 million.
Integrated Asset Management acquired a portfolio of 30 solar projects totaling 34 MW in Italy for USD 141.4 million.
8point3 Energy Partners, a yieldco company formed by First Solar and SunPower, acquired SunPower's 49 percent stake in its 102 MW Henrietta Solar Project in California for USD 134 million.
Macquarie Group and BRUC Capital acquired a 37 MW solar project pipeline including 27 individual projects in Japan from IBC SOLAR for USD 101.2 million.