TODAY’S STUDY: THE WIND BUSINESS THIS YEAR

Wind Funding and M&A, Q2 2012 Report; Funding and merger & acquisition activity for the wind sector

July 2012 (Mercom Capital Group)

Introduction

Venture Capital (VC) funding in the second quarter of 2012 amounted to just $17 million in three deals compared to a strong first quarter where $240 million went into 12 deals.

VC deals this quarter included $9.8 million raised by ReGen Powertech and $7.5 million raised by Southwest Windpower, both manufacturers of wind turbines.

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Announced large-scale project funding in Q2 2012 totaled $5.4 billion in 23 deals. Of that, $4 billion went to onshore projects and $1.4 billion went to offshore projects.

The top announced large-scale project funding deal this quarter was the $741 million raised by Colruyt for its 216 MW Northwind offshore wind farm, followed by $662 million raised by Lincs Wind Farm Limited for its 270 MW offshore wind farm, and $650 million raised by Terra-Gen Power for its 300 MW Alta Wind VII & IX wind projects. Other top project funding deals included $444 million raised by Invenergy for its 200 MW California Ridge Wind Energy Project, and $379 million raised by Iberdrola and Neoenergia for 10 wind farms totaling 288 MW.

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Large-scale project funding investors with multiple deals this quarter included BNDES, KfW IPEXBank,Union Bank, Bank of Tokyo-Mitsubishi UFJ, BayernLB, EBRD, Lloyds, Rabobank and Santander.

Corporate Merger and Acquisition (M&A) activity in Q2 2012 amounted to $93 million in five transactions compared to $872 million in 11 transactions in Q1 2012. Disclosed M&A transactions this quarter were the $60 million acquisition of Suzlon (Suzlon Energy Tianjin Limited), a wind turbine manufacturer, by China Power New Energy Development Co. and the $33 million acquisition of Tellhow Wind Power, a wind blade manufacturer, by Simomatech.

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There were 17 project M&As announced in Q2 2012 amounting to $705 million in six disclosed transactions. Top project M&A transactions were the $301 million acquisition of Agaoglu Group’s two wind farms (126 MW) by Dogan Sirketler Grubu Holding (~$2.39/W), and the $174 million acquisition of AGL Energy’s Hallett 5 wind farm (52.5 MW) by Eurus Energy (~$3.31/W). Other top transactions included the $85.5 million acquisition of a 49 percent stake in each of four AES Corporation wind farms (120 MW) by Sembcorp (~$1.45/W), the $62 million acquisition of the Dobrich wind farm (40 MW) by LUKERG Bulgaria, and the $42 million acquisition of AES Southern Europe Holdings’ St. Patrick wind farm and three InnoVent projects by Boralex (90.5 MW).

In Q2 2012, VC funding in the wind sector totaled $17 million in three deals compared to $240 million in 12 deals in Q1 2012, and $64 million in three deals in Q2 2011.

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Announced large-scale project funding in Q2 2012 amounted to $5.4 billion in 23 deals.

Large-scale onshore wind projects received $4 billion in 21 deals, compared to $1.4 billion in two deals for offshore wind.

Top large-scale project funding deals announced in the second quarter included $741 million raised by Colruyt for its 216 MW Northwind offshore wind farm, $662 million in project funding raised by Lincs Wind Farm Limited for its 270 MW offshore wind farm, and $650 million in construction debt raised by Terra-Gen Power for its 300 MW Alta Wind VII & IX wind projects.

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Other top deals were $444 million in debt raised by Invenergy for its 200 MW California Ridge Wind Energy Project, and a $379 million loan received by Iberdrola and Neoenergia for 10 wind farms with a total capacity of 288 MW.

Most of the large-scale project deals announced in Q2 2012 were in the United States.

The top large-scale project investor position was shared by BNDES (Brazilian Development Bank), KfW IPEX-Bank and Union Bank, with three deals each, followed by Bank of Tokyo-Mitsubishi UFJ, BayernLB, EBRD, Lloyds, Rabobank and Santander, funding two deals each.

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Debt Funding

Debt deals in Q2 2012 amounted to $26 million in two deals compared to $6.5 billion in six deals in Q1 2012.

There were two other types of funding deals totaling $13 million in Q2 2012, compared to $109 million in five deals in Q1 2012.

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Mergers and Acquisitions (M&A)

M&A activity in Q2 2012 amounted to $93 million in five transactions compared to $872 million in 11 transactions in Q1 2012.

Of $93 million in M&A activity in Q2 2012, manufacturing companies accounted for $60 million in one transaction, followed by component companies with $33 million in two transactions.

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M&A activity saw a steep downward trend in the wind sector in Q2 2012 with $93 million in five transactions. Only two transactions disclosed details.

The top M&A transactions were the $60 million acquisition of Suzlon (Suzlon Energy Tianjin Limited), a wind turbine manufacturer, by China Power New Energy Development Co. and the $33 million acquisition of Tellhow Wind Power, a wind blade manufacturer, by Simomatech.

There were 17 project M&As announced in Q2 2012 amounting to $705 million in six disclosed transactions.

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Top project M&A transactions in Q2 were the $301 million acquisition of Agaoglu Group’s two wind farms (126 MW) by Dogan Sirketler Grubu Holding, and the $174 million acquisition of AGL Energy’s Hallett 5 wind farm (52.5 MW) by Eurus Energy.

Other top transactions included the $85.5 million acquisition of a 49 percent stake in each of four AES Corporation wind farms (120 MW) by Sembcorp, the $62 million acquisition of the Dobrich wind farm (40 MW) by LUKERG Bulgaria, and the $42 million acquisition of AES Southern Europe Holdings’ St. Patrick wind farm, and three InnoVent projects by Boralex (90.5 MW).

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