Mercom Reports on Q2 Funding and M&A Activity

Mercom Capital Group released M&A and funding activity for solar, smart grid and wind sectors for the second quarter of 2010.

“In addition to tracking VC funding activity, Mercom is also paying close attention to project financing. While VC funding can be indicative of the health of the technology side of clean energy, project financing activity can indicate the health of the end markets. In the second quarter, we saw a lot of project financing and loans, giving us confidence that projects are getting funded, which was a big concern coming out of the recession. We also saw a lot more activity in both funding and M&A for Smart Grid,” said Raj Prabhu, managing partner of Mercom Capital Group.

Solar Energy

Total disclosed investments for the solar sector came in at US $13.8 billion for 34 transactions compared to $1.7 billion for 30 transactions during Q1. The $11.7 billion in loans issued to Suntech and Trina Solar by the Chinese Development Bank skews these numbers heavily.

In addition to Suntech and Trina, other significant funding transactions in the sector included a $175 million private placement by Solyndra, a Series D raise by BrightSource Energy of $150 million, a Series B raise by Amonix of $129.4 million, a debt and equity raise by Solar Power Partners for $115 million, project financing secured by AES solar for $128 million and a credit facility secured by Sunpower for $350 million.

Merger and acquisition (M&A) activity for Q2 was relatively similar to Q1 activity with 11 M&A deals compared to 10 deals in Q1. Out of the eleven M&A transactions, only two of them were disclosed for a total of $298 million compared to the first quarter where six were disclosed for $784 million. A significant M&A transaction in the sector included the acquisition of NextLight by First Solar for $285 million.

Wind Energy

There was higher funding activity in the Wind sector in the second quarter of 2010 compared to Q1 due to an uptick in project finance and construction loan activity. Disclosed investments for the wind sector came in at $3.4 billion for 17 transactions out of a total of 19 transactions for the quarter. This compares to $1.4 billion for 15 transactions during Q1.

Included in these totals were six significant transactions each over $300 million including project financing by Renewable Energy Systems Americas for $500 million, a $375 million loan for Acciona’s Eurus Windpark, a $302 million loan for Dong Energy, a $375 million line of credit for Duke Energy/Green Frontier Windpower, a $400 million equity financing by Pattern Energy and a $732 million credit line for China Windpower. Other transactions included equity financing by A2SEA for $141 million and equity financing by EDP Renovaveis for $141 million.

Out of 23 M&A transactions, seven were disclosed for a total of $515 million compared to the first quarter with a total of 7 deals of which only two were disclosed for $224 million. Significant transactions in the sector included the acquisition of Transfield Services’ MT Wind Farm by Meridian and the acquisition of the SC Wind Power Park by Petrom for $136 million.

According to the Department of Energy (DOE) $1.7 billion was spent in the second quarter of 2010 compared to 1.3 billion in Q1. DOE has spent a total of $4.85 billion so far, out of the $29 billion funding commitments from Recovery Act funding.

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