Solar VC rising, M&A blazing in 3Q11

VC funding in solar PV companies and projects rose modestly in 3Q11 while M&A activity is really heating up, and one sector is getting even more of investors’ attention, according to a pair of analyst reports.

October 11, 2011 – VC funding in the solar sector rose about 5% in 3Q11 vs. 2Q11 to $372M, as 42 different investors participated in 29 (disclosed) deals, according to Mercom Capital. Solar downstream companies took home the most bank ($130M for 11 deals) followed by thin-film companies ($125M in five deals). Large-scale project funding totaled $2.4B in 26 deals, most (23) being PV projects, well above 2Q11’s $1.6B and 17 deals; top projects were in Italy (Nuova Rete Solare portfolio, $361M project funding), India (Sakri Solar Power Plant, $356M loan), Canada (First Solar, two loans for $237M and $219M), and the US (SunEdison multisite project funding, $200M).

For the year through September VC funding totaled about $1.4B, on pace with 2010’s $1.7B.

Top five deals in 3Q11:
– $85M to HelioVolt (CIGS)
– $50M Series A to OneRoof Energy (residential solar operator)
– $26M to Calisolar (solar cells/modules)
– $25M to Clean Power Finance (financing)
– $23.5M Series D to Solexant (CdTe nanocrystals)

Solar VC funding by quarter, including both venture capital and private equity transactions. 2008-2009 numbers were derived from public sources including Cleantech Group and others. (Source: Mercom Capital Group)

Debt funding in 3Q11 totaled $452M, with top deals involving Chinese companies: China Sunergy, Daqo New Energy, and Hanwha SolarOne.

While VC funding slowly rises, M&A activity has definitely heated up — $563M in 20 deals in 3Q11 (though Mercom notes details only for eight), the highest number of quarterly transactions in a year. Most prominent of the group were JA Solar/Solar Silicon Valley ($180M) and MEMC/Fotowatio Renewable Ventures ($131M). M&A transactions through 3Q11 already surpass 2010’s levels, Prabhu noted, perhaps indicating the sector’s anticipated lurch toward consolidation is in motion.

Solar M&A by quarter. (Source: Mercom Capital Group)

CleanTech Group’s numbers for solar VC are slightly different, $350M in 33 deals, but the same top participants. The sector, though, was surpassed — and in individual comparisons, dwarfed — by red-hot interest in energy storage which raised $514M during the quarter spanning 19 deals (led by Bloom Energy/$150M, Li-ion battery maker Boston Power/$125M, and fuel cell firm ClearEdge/$73.5M).

Cleantech M&A overall in 3Q11 totaled 85 transactions (27 with disclosed details) and $11.8B, down slightly from 2Q11 (89 transactions/31 disclosed and $13.0B), notes the firm. There were 14 IPOs in 3Q11 amassing $1.7B, down from $1.99B in 2Q11, according to Cleantech. The biggest IPO went to Chinese wind power company Huaneng Renewable Energy, with other success enjoyed by US biofuel firms Renewable Energy Group, Fulcrum Bioenergy, and Mascoma. Most active venture investors in cleantech during 3Q11 were Draper Fisher Jurvetson (10 rounds), Kleiner Perkins Caufield & Byers (6 deals), New Enterprise Associates (5), and Chrysalix Energy VC (4).

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