Global venture capital and private equity investment
Global investment in Clean Technology and Renewable Energy companies by venture capital and private equity funds exceeded $5.0 billion in 2Q10. Although this represented a 4% decline on the previous quarter, it remains marginally ahead of average quarterly venture capital and private equity investment ($4.9 billion) since 2Q08 and 45% above the corresponding period last year.
Venture capital accounted for c.43% of total investment ($2.2 billion) this quarter, a similar total to 1Q10. Interestingly early-stage VC investment declined by 31% in 2Q10 while late-stage VC investment surged by 63%. VC activity in Europe bucked the overall trend growing by over 40% this quarter. Four deals accounted for over 25% of total VC investment in 2Q10, each of which involved companies that had recently been awarded government loans or grants.
Private equity investment remained flat in 2Q10 against 1Q10 underpinned by a resurgence of development capital activity (+23%). This compensated for a 9% decline in buyout investment during 2Q10, which at $1.6 billion, remained c.15% below average quarterly buyout investment levels. On a more positive note, development capital and buyout investment in 2Q10 increased by 33% and 52% respectively compared to the corresponding period last year.
Corporate VC activity remained robust with corporates, utilities and industrial groups including Alstom SA, Total SA, Israel Corp., GE Capital and Intel Capital Corp., investing in 26 companies through their venture capital divisions.
Douglas Lloyd, CEO of VB/Research commented: “The market lacks pre-credit crunch exuberance but has recovered significantly from the moribund levels of 2009.” Lloyd added: “The main beneficiaries of this upturn are more mature companies seeking late-stage VC funding or development capital, particularly those that have received government support.”
Corporate M&A activity remained robust in 2Q10, marginally surpassing the prior quarter in terms of completed transactions (152) and total transaction value ($14.5 billion). The quarter was notable for the lack of large deals – only two $1 billion+ transactions were completed. In terms of activity by sector, wind and solar remained joint clear leaders accounting for 43% of completed transactions in 2Q10. Energy efficiency (16%) claimed third spot.
Wind farms are currently being acquired at an average of $1.8 million per MW which is in line with 2009. However, solar plants are being sold at a discount compared to last year with a recorded average of $2.5 million per MW versus $3.1 million in 2009. This is largely due to overcapacity in Spain and Germany combined with regulatory uncertainties.
Douglas Lloyd added “Looking forward we expect M&A transaction activity to remain strong. Overcapacity and fragmentation, particularly in China, among wind component and solar module manufacturers is expected to drive consolidation. In parallel, with public markets remaining fragile, M&A remains the only viable exit option for financial investors.”
New financial investment in renewable energy projects worldwide totalled $29.6 billion during 2Q10, a marked increase on the $20.4 billion invested in 1Q10. China accounted for a significant proportion of overall activity during the period.
Collectively wind (45%) and solar (29%) almost accounted for 75% of total activity in the sector in 2Q10. The largest project was the $1.9 billion financing of the Gibe III Hydro Power Project, a 1,870MW hydro project located within the Gibe - Omo River Basin in Ethiopia. The largest wind project this period was the Collgar wind farm in Australia with a combined $680 million received from UBS, ANZ, WestLB AG and National Australia Bank amongst others.
During 2Q10 CleanTech and Renewable Energy indices suffered along with the rest of the market. The result was some high profile casualties. Solyndra, a US-based designer and manufacturer of solar photovoltaic systems for the commercial rooftop market, cancelled its IPO plans despite receiving a $535 million loan from the DoE in March 2009. China's second-largest wind turbine maker, Xinjiang Goldwind Science & Technology Co, also shelved its c.$1.2 billion IPO in mid June, making it the fifth Hong Kong IPO to be postponed in the past month.
VB/Research tracked 16 IPOs in 2Q10 totalling $1.1 billion. This represented a 28% drop in value compared to 1Q10, when 18 IPOs were recorded. China provided three of the top five public market transactions and a total of 12 IPOs in 2Q10. North America provided the remaining top two deals including the $226 million oversubscribed IPO of Tesla Motors Inc., the electric car manufacturer.
For further information on this press release please contact: Douglas Lloyd - T: +44(0)20 7251 8000 / E: douglas.lloyd[.]vbresearch.com.
VB/Research’s Clean Energy pipeline division (vbresearch.com) is a leading global source of subscription-based data, research and business intelligence in the Clean Technologies and Renewable Energy sector. Clean Energy pipeline has been active in the sector since 2005 and employs 30 analysts and journalists in various locations worldwide.
The Clean Energy pipeline online platform provides access to: proprietary business intelligence on companies and investors; VC/PE, M&A and IPO transaction data including multiples; statistics and analytics; and a global directory of professionals active in the sector. Clean Energy pipeline also provides customised market and industry surveys, research and organizes senior-level networking events.