Press release -
CleanTech Review 1Q10 - VB/Research
lobal venture capital and private equity investment in Clean Technology and Renewable Energy bounced back significantly during 1Q10 with a 43% increase over 4Q09. The headline figure of $5.0 billion, comprising $2.1 billion of VC and $2.4 billion of PE investment, is moving back towards the level last seen in 4Q08 of $4.9 billion. Green transportation was once again a major recipient of VC / PE funding this quarter with Better Place raising a £350 million Series B for its electric car charging network and Fisker Automotive, the premium electric sports car company raising a $140 million Series E. Overall this reflected greater confidence in this asset class as the public markets continue to open up and M&A deal volumes increase despite a faintly improving economy.
Early-stage VC funding, an important indicator as it fuels the entire deal lifecycle, recorded an unprecedented increase this quarter with $1.5 billion pumped into early-stage businesses versus $450 million in 4Q09.
Douglas Lloyd, CEO of VB/Research commented: “Investment activity in the first quarter of the year underlines rising confidence among VC and PE investors in the Clean Technology and Renewable Energy sector as well as the general economic climate. However, for the moment this is an investors’ market – many companies report that investors are still being very cautious, debt financing remains expensive and in short supply and as consolidation continues in certain sub-sectors the economic rationale of being independent is becoming less compelling.”
In contrast private companies, unable to go public, are still struggling to raise development capital from private equity firms. Only $860 million of development capital was raised from private equity investors this quarter which compares to a peak level of $1.9 billion in 2Q08.
Corporate VC activity accelerated this quarter with corporates, utilities and industrial groups such as Intel, PG&E, Zhejiang Sanhua and BASF investing in 34 companies through their venture capital arms, a 78% increase compared to last quarter.
Energy Efficiency and Solar were the top two sectors for VC investing in 1Q10 with 21% and 19% of total VC financing, respectively. Among the big energy efficiency VC deals was the $50 million Series D financing raised by Bridgelux, a supplier of LED chips. Solar City Corp. inked the largest solar VC deal this quarter with $60 million raised from the venture capital arm of PG&E Corporation. A noteworthy development was the emergence of the Energy Storage sector as an increasingly important recipient of early-stage VC financing. A total of $130 million was invested in 13 storage technologies ranging from thin-film batteries to large scale energy storage solutions for commercial, utility, and grid applications.
North America accounted for 80% of VC/PE funding this quarter due primarily to strong fiscal stimulus from the US government which is driving investment.
Some noticeable large buyouts were also completed this quarter including the takeover by Wealth Management Capital, a German investment fund, of the 53 MW Lieberose Solar Park for $216 million and Riverstone Holdings acquisition of offshore wind developer Seajacks International for $207 million . VB/Research also tracked higher figures this quarter for asset and project financing including a $1.2 billion debt financing of Torresol Energy’s solar power tower plants located in Spain.
Corporate M&A activity during 1Q10 was noteworthy reaching $14.3 billion with 150 completed transactions - a significant increase compared to the 103 completed transactions tracked in 4Q09. The average deal size at c. $100 million is ahead by 25% compared to last quarter. Most industry players and investors are expecting valuations and deal sizes to increase this year. However, valuation remains problematic. Targets are now priced at 2x historic revenues and 9x historic EBITDA, equating to an average discount of c.50 percent to 2006-2008 valuation multiples. Biofuels, wind, and solar were again the more prominent sectors both in terms of value and by number of transactions. The biggest story of 2010 so far came from Brazil, where Shell announced that it was forming a $12 billion joint venture with local sugarcane ethanol producer Cosan. Shell is paying $1.6 billion over the next two years for its share in the venture. In China, consolidation activity among solar manufacturers continued. Acquirers included GCL-Poly Energy Holdings, China Sunergy Co., LDK Solar Co., Jetion Solar Holdings, and Sino Dragon New Energy Holdings.
“The lack of any meaningful outcome at the Copenhagen Climate Change Conference in December 2009 (COP15) has not impacted global M&A activity. In fact, large national stimulus initiatives are actually one of the key factors fuelling cross-border M&A alongside much-needed consolidation in the solar, wind and biofuel sectors.” Douglas Lloyd, CEO of VB/Research said.
VB/Research tracked 8 IPOs during 1Q01 totalling $1.45 billion boosted by a $569 million share issue on the New York Stock Exchange by Sensata Technologies BV (NYSE: ST), a Dutch provider of customised controls and sensors for energy efficiency measures. In China, water service company Chongqing Water Group raised $512 million in its IPO on the Shanghai Stock Exchange by capitalizing on its strong market position in the industrialised central-western region of China and the likely upside from central government infrastructure spending. Equity capital markets are beginning to thaw with optimism most evident in China, since lifting its IPO freeze in June 2009, and North America where companies are showing the greatest confidence in securing public equity funding. Firms such as Tesla Motors and Codexis have filed for IPOs recently while others such as Tang Wind Energy, TMO Renewables and Solarcentry have all announced plans to go public in the near term.
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VB/Research is a leading global source of subscription-based data, research and deal intelligence on venture capital and private equity funds and their investments, M&A and the public capital markets covering the Clean Technologies and Renewable Energy sector. VB/Research has been active in the sector since 2005 and employs 30 analysts and journalists in various locations worldwide.
VB/Research’s Clean Energy pipeline online content platform delivers subscription-based research and data including: proprietary actionable intelligence on companies and investors; VC/PE, M&A and IPO databases; statistics and analytics; and a directory of professionals active in the sector. VB/Research also provides customised research and consultancy services, market surveys and organizes senior-level networking events.
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