Dividend Solar to merge with PACE-provider Figtree

Dividend Solar, a San Francisco-based provider of loans to residential solar customers, announced it is merging with PACE-provider Figtree Financing and has secured a $200m capital commitment from LL Funds for its expansion, reflecting the consolidation and growth taking place in the US solar financing sector.

Dividend rolled out its solar loan platform nationwide in 2014, amid a growing preference among US homeowners for owning their rooftop PV systems outright rather than signing long-term leases or PPAs with the likes of SolarCity and Vivint Solar.

San Diego-based Figtree funds a range of clean-tech improvements for homes, including solar and HVAC, through property-assessed clean energy (PACE) financing, which allows property owners to secure long-term financing that is repaid through their property taxes rather than traditional loan payments.

PACE financing is easier for those with less-than-optimal credit scores to obtain, potentially broadening the rooftop solar market significantly.

The merger represents the first-ever combination of a residential solar lender and a PACE financing provider, the companies claim. Both are privately owned.

Meanwhile, Philadelphia-based LL Funds, an investment manager with $1.4bn under management, has committed to providing the newly merged company with $200m to fuel its growth.

“The two companies are a very complementary fit, and together can achieve traction in the marketplace faster than either could on its own,” says Shivraj Mundy, operating partner at LL Funds, who will join Dividend as executive chairman.

Dividend does not install solar panels in-house, but rather works with a network of smaller downstream installers. Currently active in 28 US states, Dividend will launch a residential PACE programme “shortly” in California, and then expand the programme into other states.

Historically, the options for obtaining a home solar loan in the US have been thin on the ground and expensive, but they are improving rapidly as the industry grows and matures.

Dividend Solar competes with a range of players in the solar loans space, including Sungage Financial and Mosaic. SolarCity – which still focuses on the third-party ownership for the bulk of its business – recently relaunched its loan product.

The solar finance space has seen a raft of recent deals and partnerships, including the merger of Clean Power Finance and Kilowatt Financial to form Spruce Finance, and Sungage’s “strategic partnership” with Pick My Solar.