Q3 solar funding rebounds but below year ago - Mercom Capital

Third quarter global corporate funding into the solar sector increased to about $3bn in 45 deals, versus $1.7bn in 32 transactions in the previous quarter, according to Mercom Capital Group, a consulting firm based in Austin, Texas.

The numbers included funding for venture capital, public market and debt financing.

“Funding levels bounced back across the board compared to a weak Q2, but they are still well below last year’s totals,” said Raj Prabhu, chief executive of Mercom Capital Group.YEar-ago funding was about $6bn.

He noted that the combination of slower than expected US demand, overcapacity in China, and global hyper-competitive auctions leading to lower margins has affected the entire supply chain. Most solar equities are in the red year-to-date. The exception has been the rebound of some of the yieldcos.

Global VC funding (including private equity) for the solar sector almost doubled in the third quarter with $342m in 16 deals compared to the $174m raised in the same number of deals in the second quarter.

Solar downstream companies raised $273m in eight deals compared to $112m in seven deals last quarter. The largest share came from the $220m raised by Solar Mosaic, a provider of residential solar loans, from Warburg Pincus, Core Innovation Capital and Obvious Ventures.

Other top VC deals this quarter included the $47m raised by Heliatek, $20m raised by BBOXX, $15m raised by d.light, and 10m ach raised by Morgan Solar and Off-Grid Electric.

Third quarter solar public market financing came to $880m in five deals, including one IPO, compared to $179m in four deals last quarter, according to Mercom Capital. Third quarter total public market financing was $1.8bn.

The first solar IPO this year was recorded by BCPG, a solar downstream company for $166m.

Third quarter debt financing came to almost $1.8bn in 24 deals compared to 12 deals last quarter for $1.3bn. Year-over-year, $4.1bn was raised in 22 deals.

Third quarter residential and commercial solar funds raised came to $1.1bn in five deals compared to $1.36bn in 11 deals in the second quarter, according to Mercom Capital. Of the $1.1bn announced this quarter, $760m went towards lease and $333m went to loan funds. So far this year, close to $3.5bn has been raised in 22 deals. During the same period last year, more than $5bn was raised in 21 deals.

There were 18 solar M&A transactions in the third quarter compared to 17 in the previous quarter. Solar downstream companies accounted for half of the transactions (nine), followed by manufacturers with five. Four acquisitions involved SunEdison companies this quarter as a result of the company filing for bankruptcy and selling off parts of its business.

There were 55 large-scale solar project acquisitions (24 disclosed for $1.3bn) compared to the second quarter, which had 38 transactions (13 disclosed for $1.9bn). About 2.6 GW of solar projects were acquired in the third quarter compared to 2 GW in the previous quarter.