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Trend | May 2013

VC funding in wind energy rebounds

Most of the funding activity this quarter went towards project funding. Announced project funding in Q1 2013 came to $6.2 billion in 29 deals with some extremely large transactions recorded this quarter.

Wind sector had a strong 2012 globally with about 45 GW in installations during an uncertain year on the policy front. Most of the funding activity this quarter went towards project funding and project acquisitions. In a significant development showing the emergence of wind energy, in the United States, wind became the most installed energy generation source in 2012. In India, funding and M&A activity in wind energy sector in Q1 2013 was active with transactions in project, debt and other funding as well as project M&A.

According to Mercom Capital Group, a global clean energy communications and consulting firm, Wind venture capital funding rebounded in the first quarter of 2013, raising $16 million in three deals after the previous quarter saw just one $500,000 VC deal.

The consulting firm in its latest report stated that VC deals included Export Development Canada's $7 million financing of Endurance, a Vancouver-based manufacturer of wind turbines designed for power grid applications. Also receiving financing was Pentalum, a developer of a wind LiDAR (Light Detection and Ranging) system for remote sensing of wind, which raised $5.5 million from Bright Capital, Cedar Fund, Evergreen Venture Partners, ABB and Draper Fisher Jurvetson. Finally, Heartland Energy Solutions, a manufacturer of 100 kW wind turbines and blades, raised $3.9 million.

Most of the funding activity this quarter went towards project funding. Announced project funding in Q1 2013 came to $6.2 billion in 29 deals with some extremely large transactions recorded this quarter. Large-scale onshore wind projects received over $3.42 billion in 26 deals while offshore wind projects received over $2.74 billion in three deals. In the United States, wind became the most installed energy generation source in 2012 and has continued that momentum in the first quarter of 2013.

The Top 5 large-scale projects funded in Q1 2013 included $1.9 billion in project financing for wpd group's 288 MW Butendiek offshore wind project in Germany; $700 million in debt financing for Samsung Renewable Energy and Pattern Energy Group's 270 MW South Kent onshore wind project in Canada; a $664 million loan raised by EnBW Erneuerbare Energien for its 288 MW Baltic 2 offshore wind project from EIB; a $500 million investment received by Invenergy Wind for its 11 operating onshore wind projects in the United States and Canada (~1,500 MW) from Caisse; and a $399 million investment was received by EDF EN's Mexican unit, Eoliatec del Istmo, for its 164 MW Bii Stinu onshore wind project from Mitsui's subsidiary MIT Renewables Mexico and EDF Energies Nouvelles. There were four M&A transactions in Q1 2013, amounting to $543 million, out of which three were disclosed.

The top M&A transaction this quarter was the acquisition of the Polish onshore wind business of Dong Energy, a company involved in procuring, producing, distributing and trading in energy and related products, by two Polish power utilities Polska Grupa Energetyczna (PGE) and Energa, for $314 million.

There was strong project acquisition activity this quarter with 17 transactions amounting to $1.4 billion. The largest project M&A transaction by amount was UK-based renewable energy investor and developer Blue Energy's acquisition of the 177 MW RidgeWind portfolio from HgCapital for $392 million. The largest project acquisition by MW was Geronimo Energy's acquisition of Midwest Wind Energy's 1,000 MW Wind Park Burg II Project.

Notable Indian transactions:

Project funding:

  • Continuum Wind Energy, a developer of wind projects in India and Asia receiving a $164 million loan from State Bank of India for its 175 MW wind project in Maharashtra
  • Gujarat Venture Finance picking up an equity stake in a SPV (Special Purpose Vehicle) of UK based SITAC group, formed to execute a 50 MW wind project of ~$47 million in Gujarat.

Debt funding:

  • Suzlon raising $647 million in a bond issue by State Bank of India and JPMorgan Chase

Other funding:

  • An affiliate of the Government of Singapore Investment Corp. (GIC) has agreed to invest ~$150 million into Greenko's Mauritius division - funds that will be deployed into Indian utility-scale wind and hydro projects.

Project M&A:

  • Mytrah Energy's acquisition of 59.75 MW of wind projects in Tamil Nadu and Maharashtra for an undisclosed amount.
  • Bharat Light & Power's acquisition of 150 MW wind projects in Gujarat from DLF for $53 million
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