Corporate funding in the global solar sector comes to $7.1B, Indian companies top the list

Solar funding and M&A activity for the third quarter of 2017 has seen a growth of 74 percent compared to second quarter of 2017, with $2.4 billion raised in 45 deals. With Indian companies emerging at the top, we take a look at few of the notable transactions.

In the third quarter of 2017, the total corporate funding for the solar sector was slightly lower compared to the same period in 2016. With $7.1 billion raised this year compared to the $7.5 billion raised in the last year, the corporate funds made way for 143 deals in 2017 compared to 125 deals in the same period of 2016. The funding corpus which includes venture capital funding, public market and debt financing has crossed $10 billion.

In a report by Mercom Capital Group, a global clean energy communications and consulting firm, merger and acquisition (M&A) activity for the solar sector is debugged.

It is interesting to note that Indian companies topped the list of deals this quarter. A quick comparison of the number of deals closed and their values, between last and this year, prove that investors now seem to be wary and a little more risk-averse, globally.

Decoding the year

Looking at just Q3 2017 data, the report says that corporate funding in the solar sector grew 74 percent compared to Q2 2017, with $2.4 billion raised in 45 deals. In Q2 2017, $1.4 billion was raised in 37 deals. Year-over-year (YoY) funding in Q3 2017 was about 19 percent lower compared to the $3 billion raised in Q3 2016.

Debt financing activity outside of the United States helped bump up corporate funding in the third quarter as financing activity in the United States was muted ahead of the Suniva anti-dumping case decision, commented Raj Prabhu, CEO of Mercom Capital Group.

Global VC funding (venture capital, private equity, and corporate venture capital) for the solar sector in 9 months rose a slight seven percent to $985 million from $925 million raised during the same period in 2016, largely due to a strong first quarter in 2017.

In Q3 2017, VC funding for the solar sector doubled with $269 million raised in 23 deals compared to $128 million raised in the same number of deals during Q2 2017. Most of the VC funding raised in Q3 2017 (72 percent) went to solar downstream companies with $193 million in 13 deals.

Solar public market funding was approximately 12 percent lower compared to the first nine months of 2016, with $1 billion raised in 9M 2017 compared to $1.2 billion raised during the same period of 2016. Public market financing fell significantly in Q3 2017 with just $79 million in four deals, down from $473 million raised in six deals in Q2 2017.

During the first nine months of 2017, debt financing activity accounted for $5.1 billion in 51 deals, which was almost six percent lower compared to the first nine months of 2016, when $5.4 billion was raised in 55 deals. In Q3 2017, announced debt financing rose steeply to $2.1 billion in 18 deals compared to the $798 million raised in eight deals during the second quarter of 2017.

Notable Indian transactions in Q3 2017

CleanMax Solar, an Indian rooftop solar developer, raised $100 million in equity financing from Warburg Pincus. In debt funding, two companies raised prominent funds; Greenko Energy Holdings – an owner and operator of solar and wind projects – raised a combined $1 billion through the issue of senior notes; it raised $650 million through the issuance of senior notes due in 2024 and another $350 million through the issuance of senior notes due in 2022. The other notable transaction was that of ACME Cleantech Solutions – a flagship company of Acme Group and a solar project developer – which secured a $108 million flexi line of credit from Piramal Finance, a subsidiary of Piramal Enterprises.

Two projects from IDFC Alternatives and IBC SOLAR, raised $39 million and $15.3 million, respectively.

Where did the money go?

The Top VC deal in the third quarter of 2017 was by the Indian rooftop installer CleanMax Solar. It was followed by the $56 million raised by Singapore’s Sunseap Group, the $21 million secured by Sol Voltaics, and Ampt’s $15 million. Ubiquitous Energy also raised $15 million. A total of 35 investors participated in solar funding in the third quarter of 2017.

In the top debt deals, Greenko Energy Holdings raised $1 and Cypress Creek Renewables also received $450 million from Temasek. The announced large-scale project funding in 9M 2017 crossed the $10 billion mark, with $10.2 billion raised for the development of 117 projects. For the third quarter of 2017 alone, large-scale project funding came to more than $2.8 billion through 36 .

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A flagship company of Acme Group and a solar project developer, ACME Cleantech Solutions secured a $108 million flexi line of credit from Piramal Finance, a subsidiary of Piramal Enterprises. Other notable project funding was that of IDFC Alternatives — it raised $39 million through the sale of non-convertible debentures to an infrastructure debt fund and a financial institution, to refinance two solar projects totaling 40 MW located in Punjab. Odisha-based IBC SOLAR, a solar project developer, secured $15.3 million in debt financing from L&T Infrastructure Finance for the construction of a 20 MW solar project located in Odisha.

The announced 36 large-scale project funding deals in Q3 2017 were distributed across 18 countries worldwide. Most of the funding went to solar projects in Egypt with $900 million in one deal. The United States, with six deals, accounted for the highest number of deals followed by Japan with five. Other countries which recorded multiple deals this quarter included: Australia, Spain, India, Malaysia, and the UK. With Indian companies leading the brigade, the next quarterly holds a competitive space for the countries who acquired new deals.