New Delhi: The global solar sector witnessed a total corporate funding and merger and acquisitions activity worth USD 9.7 billion in 2018, a 24 per cent drop compared to the year-ago period, according to a report. Mercom Capital Group said the total M&A and global corporate fundings, including venture capital (VC), debt financing and public market financing stood at USD 9.7 billion, a 24 per cent drop compared with the USD 12.8 billion raised in 2017.
Global VC funding for the solar sector in 2018 fell 18 per cent to USD 1.3 billion in 65 deals, compared with USD 1.6 billion raised in 99 deals in 2017, the report said. Commenting on decline in funding, Mercom Capital Group Chief Executive Officer Raj Prabhu said: “2018 was a year filled with uncertainties which started with Section 201 tariffs followed by an announcement from China that it was capping installations and reducing its feed-in-tariff.”
Besides, more bad news came from India which imposed safeguard duties on imports. Uncertainty stemming from the three largest solar markets in the world was reflected in equities of publicly-traded solar companies as well as fund raising activity during the year, he added.
Out of the USD 1.3 billion in VC funding raised in 65 deals in 2018, USD 1.2 billion went to 50 solar downstream companies, which comprised 91 per cent of the total VC funding in 2018. The top solar VC-funded companies in 2018 were Cypress Creek Renewables which raised USD 200 million, GreenYellow with USD 174 million, followed by Amp Solar with USD 154 million, Wunder Capital with USD 112 million and Sunnova Energy with USD 100 million, the report said.
The top investors in large-scale projects included the European Bank for Reconstruction and Development (EBRD), which invested in 16 projects, followed by the Dutch development bank FMO with seven deals, and Natixis with six deals. Merger and acquisition activity in the solar sector increased with 82 transactions in 2018 compared to 72 transactions in 2017.
The largest and most notable transaction in 2018 was the USD 5 billion acquisition of Equis Energy by Global Infrastructure Partners (GIP) – through its Global Infrastructure Partners III Fund along with Canada’s Public Sector Pension Investment Board and CIC Capital. “About 100 GW of large-scale projects have been acquired since 2010, a reflection of how far solar has come as an asset class. Quality solar projects are now a mature, attractive investment opportunity around the world, said Prabhu.