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Finance | June 2012

Wind Q1 2012: Funding and M&A activity

The wind industry saw strong VC funding activity in the first quarter of 2012 with $240 million invested in 12 deals, says a Mercom Capital Group report.

Venture capital (VC) funding in the first quarter came in strong with $240 million going into 12 deals as compared to just $12 million going into two deals in the last quarter.

Top VC deals in Q1 included a $183 million raise by Element Power, a global project developer, and a $20.2 million raise by ReGen Powertech, a turnkey solution provider and wind turbine manufacturer. Other top transactions included an $18.6 million raise by project developer Leap Green Energy, a $10 million raise by Apex Wind Energy, a developer of commercial scale wind facilities, and a $3.5 million raise by Pentalum, a developer of Wind LiDAR for remote wind sensing.

Debt funding in Q1 came to $6.5 billion in six deals. The top debt deal was the $5.5 billion credit facility received by Xinjiang Goldwind Science Technology from China Development Bank, a continuing trend of Chinese banks providing multi-billion dollar credit facilities to Chinese wind and solar companies.

M&A activity was strong in the wind sector in Q1 with $872 million in 11 transactions, of which only three transactions had details disclosed. This has been the strongest quarter for M&A transactions since Q1 2010. As a technology group, wind downstream companies had the most deals with four followed by manufacturers, wind components, service providers and BOS companies.

The top M&A deals were the $850 million acquisition of Seajacks International, a UK-based offshore Wind Power Service provider, by Marubeni Corporation and Innovation Network Corporation of Japan, the $12 million acquisition of Fuji Heavy Industries' wind turbine generator business by Hitachi, and the $10.2 million acquisition of a 49.9 per cent stake in OWEC Tower, an offshore wind turbine foundation designer by KV Ventus.

There was also significant project M&A activity totalling $2.7 billion in 18 transactions. Top project M&A transactions announced in Q1 were the $900 million acquisition of Gamesa's 480 MW Pocahontas Prairie, Sandy Ridge, Senate and Minonk wind projects by Algonquin Power & Utilities, and the $840 million acquisition of a 50 per cent stake in Dong Energy's 277 MW Borkum Riffgrund 1 project by KIRKBI and the Oticon Foundation.

Other top transactions included the $620 million acquisition of Bons Ventos Geradora de Energia's Taiba Albatroz, Bons Ventos, Enacel, Canoa Quebrada Wind farms (157.5 MW combined) by CPFL Energia, the $300 million acquisition of Suzlon Energy's five Brazilian wind farms (136.5 MW combined) by Banco do Brasil, Banco Votorantim and Enerplan, and the $23 million acquisition of a 51 per cent stake in Canadian Hill's 298.5 MW Oklahoma Wind Project by Atlantic Power.

2011-12 Wind funding and M&A

The wind industry saw strong VC funding activity in the first quarter of 2012 with $240 million invested in 12 deals. In comparison, VC funding was just $12 million in two deals in Q4 2011. The 12 VC deals in Q1 was also the highest amount of deals in a quarter since 2009.

VC funding

Wind had the highest number of VC deals (12) in a quarter since 2009.

Top 5 VC funding deals

Top VC deals in Q1 included a $183 million raise by Element Power, a global project developer, $20.2 million raised by ReGen Powertech, a turnkey solution provider and wind turbine manufacturer. Other top transactions included an $18.6 million raise by the project developer Leap Green Energy, $10 million raised by Apex Wind Energy, a developer of commercial-scale wind energy facilities, and $3.5 million raised by Pentalum, a developer of Wind LiDAR for remote wind sensing.

Large-scale project funding by type

Large-scale onshore wind projects received $3.2 billion in 16 deals. There were no offshore project announcements this quarter.

Large-scale project funding by country

Most of the large-scale project investments announced in Q1 2012 were in the United States.

Project M&A by type

Of the 18 announced project M&A deals, onshore wind accounted for $1.8 billion in 16 deals. Offshore wind totalled $840 million in two deals.
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