NewEnergyNews: TODAY’S STUDY: THE SOLAR BUSINESS, Q3 2011

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    Tuesday, November 01, 2011

    TODAY’S STUDY: THE SOLAR BUSINESS, Q3 2011

    Solar Funding and M&A, Q3 2011 Report; Funding and merger & acquisition activity for the Solar sector
    October 2011 (Mercom Capital Group)

    Introduction

    Venture Capital (VC) funding in the solar sector remained steady in Q3 2011 with $372 million raised compared to $354 million in Q2 2011. The number of deals funded was slightly higher with 31 deals compared to the 26 that were recorded in Q2 2011.

    A total of 42 different investors participated in these funding rounds with only Good Energies involved in multiple transactions.

    Year-to-date funding in 2011 comes to about $1.4 billion, which is on pace with last year’s funding activity which amounted to $1.7 billion. In terms of number of deals, 2011 is already ahead of the total 2010 year end numbers.

    click to enlarge

    Most of the VC funding this quarter involved solar downstream companies. Heliovolt’s $85 million raise was the top VC funding deal this quarter.

    Large-scale project funding amounted to $2.4 billion in 26 deals in Q3 2011, with most of the projects (23) that received funding being PV projects.

    Debt funding in Q3 2011 amounted to $452 million in five announced deals. The top three involved Chinese companies include China Sunergy, Daqo New Energy and Hanwha SolarOne.

    click to enlarge

    Q3 2011 was a very active quarter for M&A with 20 transactions announced amounting to $563 million. Top M&A transactions included the acquisition of Solar Silicon Valley by JA Solar for $180 million, followed by the acquisition of Fotowatio Renewable ventures U.S. by MEMC for $131 million and Guodian Ningxia Solar acquisition by China Guodian Corporation for $88 million.

    2011 so far has been much more active for M&A deals compared to 2010, signaling that the move towards industry consolidation may have begun.

    click to enlarge

    VC/PE Funding

    VC funding in the solar sector held steady with $372 million in 31 deals, compared to VC funding in Q2 2011 totaling $354 million in 26 deals.

    This was the most active quarter for VC funding deals since Q1 2010 with 31 transactions.

    Forty-two different investors participated in these funding rounds.

    click to enlarge

    Solar downstream companies were involved in the most number (11) of VC deals in Q3 2011. Year-to-date solar downstream companies have been involved in 21 VC deals. Thin film companies have received the most amount of funding with $433 million raised.

    The top VC funding deal in Q3 2011 was Heliovolt’s $85 million raise, followed by $50 million raised by OneRoof Energy and $26 million raised by Calisolar. The top five VC deals also included Clear Power Finance’s $25 million raise and Solexant’s $23 million raise.

    The US accounted for most of the VC deals with 27 out of the 31 deals announced in Q3 of 2011.

    click to enlarge

    Large-Scale Project Funding

    Twenty-three of the 26 large-scale projects that announced funding in Q3 2011 were for PV projects.

    The top project funding deal announced in Q3 2011 was a $361 million raise by Nuova Rete Solare, followed by $356 million raised by Maharashtra State Power Generation Co. for its Sakri Solar Power Plant and $237 million raised by First Solar Development Canada.

    click to enlarge

    Other top deals included $219 million raised by First Solar Development Canada and $200 million raised by Sun Edison for its multi-site project.

    The U.S. Export–Import Bank was the most active lender with seven deals in Q3 2011 amounting to approximately $568 million in project lending.

    click to enlarge

    Debt Funding

    Debt funding amounted to $452 million in five announced deals in Q3 2011. Top deals included $160 million in credit facilities for China Sunergy from China Development Bank, a $154 million loan for Daqo New Energy from Bank of China and a $100 million term loan for Hanwha SolarOne by Standard Chartered Bank and Korea Development Bank.

    click to enlarge

    Mergers and Acquisition

    Q3 2011 was a very active M&A quarter with 20 transactions announced for $563 million.

    This has been the most active quarter since Q1 2010 for the number of M&A transactions. Only eight of the 20 transactions had details disclosed indicating a much higher amount of M&A activity.

    click to enlarge

    Overall, 2011 year-to-date has been much more active for M&A transactions compared to 2010 signaling that the industry consolidation may have begun.

    Sixteen project mergers and acquisitions amounting to $152 million were recorded in Q3 2011. Only two transactions out of the 16 announced had transaction details disclosed.

    Most of the project M&A activity in Q3 2011 involved PV projects. Eleven projects out of a total of 16 were PV projects.

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