Mercom Capital Group, a global clean energy communications and consulting firm, released its report on funding and merger and acquisition (M&A) activity for the global solar sector in the first quarter of 2020.
Total corporate funding, including venture capital funding, public market, and debt financing into the solar sector in Q1 2020 came to $1.9 billion, 31% lower compared to the $2.8 billion raised in Q1 2019.
The decrease in total corporate funding was primarily due to lower venture capital and public market financing activity in Q1 2020 as the Coronavirus pandemic disrupted solar markets around the world.
“Funding levels dropped in Q1 as the Coronavirus pandemic brought the global economy to a halt. Most large economies are shut down and there is minimal activity in solar markets. Solar project M&A was the bright spot in this time of uncertainty, proving once again that solar is a safe long-term bet. The worst maybe yet to come, but hope is that activity picks up in the second half of the year,” said Raj Prabhu, CEO of Mercom Capital Group.
Global VC funding for the solar sector in Q1 2020 reached $145 million in nine deals compared to $176 million raised in 13 deals in Q1 2019.
The majority of VC funding raised in Q1 2020 went to solar downstream companies with $122 million in seven deals.
The top VC deals in the first quarter of 2020 were: Sunseap Group, which raised a total of $109 million in two different deals; cKers Finance raised $5 million; $4 million was raised by Daystar Power; and $3 million was raised by ZunRoof.
Solar public market financing dropped significantly with $22 million in one deal in Q1 2020 compared to $247 million in three deals in Q1 2019.
Announced debt financing in Q1 2020 totaled to $1.8 billion in seven deals compared to $2.4 billion in 19 deals in Q1 2019. One securitization deal was recorded in the quarter.
There were 12 solar M&A transactions in Q1 2020 compared 18 solar M&A transactions in Q1 2019. Of the 12 solar M&A transactions announced in Q1 2020, 11 involved Solar Downstream companies. There was one transaction involving a module manufacturer.
There were 55 large-scale solar project acquisitions (eight disclosed for $4.1 billion) in Q1 2020 compared to 54 large-scale solar project acquisitions (20 disclosed for $1.4 billion) in Q1 2019.
Over 12 GW of solar projects were acquired in Q1 2020 compared to 10.1 GW in Q4 2019. In a YoY comparison, 5.9 GW were acquired in Q1 2019.
Oil and gas majors were the most active project acquirers in the first quarter of 2020, acquiring 6,452 MW of solar projects. Investment firms acquired 4,149 MW of projects, followed by project developers which picked up 937 MW of projects.
There were 230 companies and investors covered in this report, which is 75 pages in length and contains 66 charts, graphs, and tables.
Clean energy investor cKers Finance - raised $5 million from New Energy Nexus to accelerate the development of new distributed solar segments in India.
ZunRoof - an Indian solar rooftop startup - raised Series A funding of $3 million from Godrej Investments.
Venture Catalysts - an integrated incubator - invested an undisclosed amount in Skilancer Solar, a solar module cleaning solutions provider.
ReNew Power, a renewable energy project developer - raised $450 million through a dollar bond issuance.
Fourth Partner Energy - a distributed solar energy management company - received a loan of ₹5 million (~$0.067 million), from Grameen Impact India (GIII), a non-banking finance corporation (NBFC) registered under the Reserve Bank of India (RBI), towards its Power@1 program for 18 months. Through the Power@1 program, Fourth Partner Energy aims to provide electricity to non-profit organizations like government schools, rural hospitals, and others at a rate of ₹1 (~$0.013)/kWh.
Investment company Caisse de depot et placement du Quebec (CDPQ) increased its stake in Aure Power Global (AZRE), an independent solar power developer in India, by acquiring an additional 717,701 shares from a shareholder of AZRE. After acquiring the additional shares, CDPQ is the direct owner of 24,259,272 shares of AZRE, which represent 50.9% of the outstanding shares of AZRE.
SunEdison Infrastructure Limited (formerly YKM Industries Limited), through its subsidiary SIL Rooftop Solar Power Private Limited (SIL) - acquired 100% fully paid-up equity share capital along with voting rights of Sherisha Solar Private Limited (SSPL).
ENGIE - a French multinational electric utility company - announced that it will sell a 74% stake in its solar assets in India to Edelweiss Infrastructure Yield Plus (EIYP). This transaction is a part of a strategic partnership between the two companies. The French power distribution company said it will sell 12 solar assets with a total operating capacity of 813 MW (DC) to EIYP and Sekura Energy Limited, a portfolio company of EIYP. The company added that the transaction would take place during the first half of 2020 and will help ENGIE reduce its net debt by over €400 million (~$442.91 million).
Actis - an investment firm - acquired 600 MW solar projects from Acme Cleantech Solutions for ₹30 billion (~$410 million). The equity value of the transaction was estimated to be ₹9 billion (~$0.12 billion). The deal is subject to regulatory approvals.
Sterling and Wilson Solar has approved the merger of Sterling & Wilson Waaree (a wholly-owned subsidiary of Sterling & Wilson Solar, was set up as a special purpose vehicle for the execution of a 9 MW project in Niger) with Sterling & Wilson Solar (the solar engineering and construction arm of the Shapoorji Pallonji Group). No equity shares will be issued by Sterling& Wilson Solar to the shareholders of Sterling & Wilson Waaree as the entire capital of the latter is held by Sterling & Wilson Solar. After the merger, Sterling & Wilson Solar would hold the entire share capital of Sterling & Wilson Waaree.
Yinson Holdings Berhad entered into multiple agreements to acquire a 37.5% equity interest in Rising Sun Energy - company with two operational solar projects (140 MW) in the Bhadla Solar Park - for consideration of RM32 million (~$7.24 million).
Total corporate funding, including venture capital funding, public market, and debt financing into the solar sector in Q1 2020 came to $1.9 billion, 31% lower compared to the $2.8 billion raised in Q1 2019.
The decrease in total corporate funding was primarily due to lower venture capital and public market financing activity in Q1 2020 as the Coronavirus pandemic disrupted solar markets around the world.
“Funding levels dropped in Q1 as the Coronavirus pandemic brought the global economy to a halt. Most large economies are shut down and there is minimal activity in solar markets. Solar project M&A was the bright spot in this time of uncertainty, proving once again that solar is a safe long-term bet. The worst maybe yet to come, but hope is that activity picks up in the second half of the year,” said Raj Prabhu, CEO of Mercom Capital Group.
Global VC funding for the solar sector in Q1 2020 reached $145 million in nine deals compared to $176 million raised in 13 deals in Q1 2019.
The majority of VC funding raised in Q1 2020 went to solar downstream companies with $122 million in seven deals.
The top VC deals in the first quarter of 2020 were: Sunseap Group, which raised a total of $109 million in two different deals; cKers Finance raised $5 million; $4 million was raised by Daystar Power; and $3 million was raised by ZunRoof.
Solar public market financing dropped significantly with $22 million in one deal in Q1 2020 compared to $247 million in three deals in Q1 2019.
Announced debt financing in Q1 2020 totaled to $1.8 billion in seven deals compared to $2.4 billion in 19 deals in Q1 2019. One securitization deal was recorded in the quarter.
There were 12 solar M&A transactions in Q1 2020 compared 18 solar M&A transactions in Q1 2019. Of the 12 solar M&A transactions announced in Q1 2020, 11 involved Solar Downstream companies. There was one transaction involving a module manufacturer.
There were 55 large-scale solar project acquisitions (eight disclosed for $4.1 billion) in Q1 2020 compared to 54 large-scale solar project acquisitions (20 disclosed for $1.4 billion) in Q1 2019.
Over 12 GW of solar projects were acquired in Q1 2020 compared to 10.1 GW in Q4 2019. In a YoY comparison, 5.9 GW were acquired in Q1 2019.
Oil and gas majors were the most active project acquirers in the first quarter of 2020, acquiring 6,452 MW of solar projects. Investment firms acquired 4,149 MW of projects, followed by project developers which picked up 937 MW of projects.
There were 230 companies and investors covered in this report, which is 75 pages in length and contains 66 charts, graphs, and tables.
Notable India Deals in Q1 2020:
VC Funding:
Clean energy investor cKers Finance - raised $5 million from New Energy Nexus to accelerate the development of new distributed solar segments in India.
ZunRoof - an Indian solar rooftop startup - raised Series A funding of $3 million from Godrej Investments.
Venture Catalysts - an integrated incubator - invested an undisclosed amount in Skilancer Solar, a solar module cleaning solutions provider.
Debt Funding:
ReNew Power, a renewable energy project developer - raised $450 million through a dollar bond issuance.
Fourth Partner Energy - a distributed solar energy management company - received a loan of ₹5 million (~$0.067 million), from Grameen Impact India (GIII), a non-banking finance corporation (NBFC) registered under the Reserve Bank of India (RBI), towards its Power@1 program for 18 months. Through the Power@1 program, Fourth Partner Energy aims to provide electricity to non-profit organizations like government schools, rural hospitals, and others at a rate of ₹1 (~$0.013)/kWh.
Corporate M&A:
Investment company Caisse de depot et placement du Quebec (CDPQ) increased its stake in Aure Power Global (AZRE), an independent solar power developer in India, by acquiring an additional 717,701 shares from a shareholder of AZRE. After acquiring the additional shares, CDPQ is the direct owner of 24,259,272 shares of AZRE, which represent 50.9% of the outstanding shares of AZRE.
SunEdison Infrastructure Limited (formerly YKM Industries Limited), through its subsidiary SIL Rooftop Solar Power Private Limited (SIL) - acquired 100% fully paid-up equity share capital along with voting rights of Sherisha Solar Private Limited (SSPL).
Project Acquisition:
ENGIE - a French multinational electric utility company - announced that it will sell a 74% stake in its solar assets in India to Edelweiss Infrastructure Yield Plus (EIYP). This transaction is a part of a strategic partnership between the two companies. The French power distribution company said it will sell 12 solar assets with a total operating capacity of 813 MW (DC) to EIYP and Sekura Energy Limited, a portfolio company of EIYP. The company added that the transaction would take place during the first half of 2020 and will help ENGIE reduce its net debt by over €400 million (~$442.91 million).
Actis - an investment firm - acquired 600 MW solar projects from Acme Cleantech Solutions for ₹30 billion (~$410 million). The equity value of the transaction was estimated to be ₹9 billion (~$0.12 billion). The deal is subject to regulatory approvals.
Sterling and Wilson Solar has approved the merger of Sterling & Wilson Waaree (a wholly-owned subsidiary of Sterling & Wilson Solar, was set up as a special purpose vehicle for the execution of a 9 MW project in Niger) with Sterling & Wilson Solar (the solar engineering and construction arm of the Shapoorji Pallonji Group). No equity shares will be issued by Sterling& Wilson Solar to the shareholders of Sterling & Wilson Waaree as the entire capital of the latter is held by Sterling & Wilson Solar. After the merger, Sterling & Wilson Solar would hold the entire share capital of Sterling & Wilson Waaree.
Yinson Holdings Berhad entered into multiple agreements to acquire a 37.5% equity interest in Rising Sun Energy - company with two operational solar projects (140 MW) in the Bhadla Solar Park - for consideration of RM32 million (~$7.24 million).
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