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Mercom: Solar VC funding falls to lowest level since 2007

Mercom Capital Group LLC (Austin, Texas, US) has released its "Solar Funding and M&A" report for the fourth quarter and full year 2012. The report finds that venture capital (VC) funding fell to USD 992 million in 2012, its lowest level since 2007, as the value of mergers and acquisitions increased.

Mercom reports that more than 50 solar companies announced plans to downsize or restructure their operations in 2012, including SMA. However, the company notes that despite these troubles global PV demand continued to grow 12% to 30.9 GW in 2012.

"The slowdown in VC funding can be attributed to the grim prospects for thin-film, concentrating solar and concentrating PV technologies," commented Mercom Capital Managing Partner Raj Prabhu.

"With the drastic fall in crystalline-silicon PV prices over the last two years, most other technologies have struggled to compete."

CIGS, downstream companies receive most VC funds

While the value of VC deals was at a four-year low, the number of deals was only slightly smaller at 103, with a much lower average value of USD 9.63 million.

The largest VC rounds were a USD 83.6 million round for BrightSource, a USD 81 million round for SolarCity, and a USD 70 million round for NanoSolar.

The largest recipient of funding was thin-film companies at USD 314 million, 87% of which went to copper indium gallium diselenide (CIGS) technologies. Downstream solar players received USD 269 million, including a USD 60 million round for Sunrun.

Debt funding falls to USD 6.9 billion

56.jpgDuring 2012 debt funding, which has been the largest souce of capital inputs into the industry, fell to only USD 6.9 billion in 34 deals.

Since 2010 debt funding has totaled USD 62.5 billion, including USD 52.6 billion in loans, credit facilities and framework agreements by Chinese banks to Chinese PV companies.

Project funding booms to USD 8.7 billion

However, project funding boomed during the year to USD 8.7 billion in 84 deals, including four deals worth over USD 500 million. The largest of these was the USD 720 million that renewable energy project financier FINEXIM provided for four 50 MW CSP plants from SolMex Energy.

Large banks and asset managers also invested USD 1.98 billion into project funds to finance solar leasing programs, compared to USD 1.91 billion in 2011.

Mergers and acquisitions boom

Finally, the number of mergers and acquisitions fell from 65 to 52 in 2012, for a total value of USD 6.67 billion in 19 disclosed deals, up from USD 4 billion in 2011.

Mercom notes that "most M&A transactions in 2012 were not successful exits" and states that consolidation largely consisted of acquirers targeting distressed companies for cheap technology and equipment.

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