Tracking The Deal Flow: Venture Capitalists Still Favoring Solar Firms

    Tracking The Deal Flow: Venture Capitalists Still Favoring Solar Firms The solar sector enjoyed a ‘solid’ quarter with regard to venture-capital (VC) funding and mergers and acquisitions (M&A) activity, according to a new report by Mercom Capital Group.

    VC funding for solar companies was steady in the third quarter of this year, coming in at $372 million – compared to $354 million in the second quarter. Forty-two different VC investors participated in 29 disclosed deals.

    ‘VC funding so far this year is on pace with 2010, and M&A activity is picking up,’ says Raj Prabhu, managing partner at Mercom Capital Group. ‘The number of M&A transactions in 2011 has already surpassed 2010 numbers, signaling that the move toward industry consolidation may have begun.’

    The top five funding deals included an $85 million raise by HelioVolt, a manufacturer of thin-film copper indium gallium selenide modules. OneRoof Energy, a developer, owner and operator of solar energy generation systems for residential markets raised $50 million in a Series A round.

    In addition, Calisolar, a vertically integrated solar manufacturer, raised $26 million. Clean Power Finance, a provider of integrated services and financing products, raised $25 million, and Solexant, a producer of ultra-thin-film solar cells, raised $23.5 million in a Series D round.

    Solar downstream companies attracted the most funding this quarter, closely followed by thin-film companies, the report says. Downstream companies attracted $130 million in 11 deals, and thin-film companies attracted $125 million in five deals.

    M&A activity came in at $563 million in 20 transactions, with details disclosed for only eight. This is the highest number of transactions in a quarter since 2010, Mercom Capital Group notes. The most prominent transactions included the acquisitions of Solar Silicon Valley by JA Solar for $180 million and Fotowatio Renewable Ventures by MEMC for $131 million.

    Finally, debt funding in the third quarter amounted to $452 million in five announced deals. The top deals involved Chinese companies, including China Sunergy, Daqo New Energy and Hanwha SolarOne.

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