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Corporate Venture Capital (VC) funding in the global solar sector during the third quarter of 2012 was down to its lowest levels since 2008, totalling just $72 million in 14 deals compared to $376 million in 32 deals in the previous quarter (second quarter) of 2012.
While there were 12 corporate M&A transactions in the third quarter totalling $393 million, only four transactions disclosed amounts. This has been brought out in a report by Mercom Capital Group, llc, a global clean energy communications and consulting firm. The report deals with funding and merger and acquisition (M&A) activity for the solar sector during the third quarter of 2012.
“This was the first sub-$100 million quarter for solar VC funding since 2008. It is a very challenging market, particularly for upstream companies — good exits have become rare and M&A deals are more and more resembling distress sales,” said Raj Prabhu, Managing Partner at Mercom Capital Group.
The report shows that 26 investors participated in the 14 deals in third quarter, and only New Enterprise Associates was involved in multiple deals.
The leading VC deal in third quarter was concentrating photovoltaic company SolFocus with $15 million.
At the end of the quarter, most of the year-to-date VC funding went to solar downstream ($258 million) and thin film companies ($246 million).
India, however, has not seen any corporate VC funding in the third quarter, but has reported project VC funding.
The transactions relating to Indian companies during the period include: Welspun Energy, a renewable energy project developer, securing long-term project funding of Rs 355 crore ($60.6 million) for a 50 megawatt solar photovoltaic project in Rajasthan from a consortium of lenders, including three PSU banks — Central Bank of India, Union Bank of India, IIFCL and Vijaya Bank.
Mahindra Suryaprakash, a Mumbai-based company owned by Kiran Energy and Mahindra Holding, securing a loan of Rs 188 crore ($34.3 million) from The Export-Import Bank of the US to construct two solar photovoltaic plants of 20 megawatt and 10 megawatt in Rajasthan.
Solar Field Energy Two, a Mumbai-based company wholly-owned by Kiran Energy Solar Private Power, securing a loan of Rs 126 crore ($ 23 million) from The Export-Import Bank of the US, to construct a 20 megawatt solar photovoltaic plant in Rajasthan.
What is interesting, the report noted, was third-party finance firms, or solar lease firms. Over $1 billion in solar residential and commercial lease funds have been raised in the third quarter of 2012, and almost $ 2 billion in 2012 till date.
Of the 12 corporate M&A transactions in the third quarter of 2012, two transactions — Q.Cells and MiaSolé — were distressed sales, the report pointed out.
A notable transaction this quarter was the acquisition of Vivint by Blackstone Group for $2 billion. Included in the transaction was the Vivint Solar division, a third-party solar finance lease firm. The valuation of Vivint Solar on its own is unknown.
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