Total corporate funding of solar rose in the third quarter of 2015 despite the recent hammering taken by solar stock prices in the equity markets.
According to Mercom Capital’s latest report on solar funding and merger and acquisition (M&A) activity, total funding in Q3, including venture capital (VC), debt financing and public market financing, came to US$6.2 billion from US$5.9 billion in Q2.
VC funding reached US$257 million, its highest level in 2015, while debt financing also saw an uptick, rising from US$3.4 billion to US$4.1 billion.
The overall upward trend, however, was not universal, with public market financing taking a hit, reflecting the falling stock prices suffered by a number of leading solar firms in recent months.
“The third quarter of 2015 has been eventful, especially in the equity markets,” said Raj Prabhu, CEO of Mercom Capital Group. “Although solar power demand continues to grow, solar stocks have made a complete U-turn in the last three months, affecting public market financing, which was down by about a billion dollars excluding IPOs.”
According to Mercom, total public market financing fell from US$2.3 billion to US$1.8 billion. Within that figure, the IPO of SunEdison yieldco TerraForm Global raised US$675 million, while US residential solar provider Sunrun raised US$250 million in its Nasdaq offering
Generally, solar yieldcos struggled over the past quarter, raising only half what they managed in Q2.
“With yieldcos falling out of favour, their fundraising in the public markets fell by half this quarter to US$802 million,” said Prabhu.
Meanwhile, after two record quarters, residential and commercial solar funds announced in Q3 2015 dropped to US$997 million in five deals, having managed US$2 billion in Q2 across the same number of deals. However, the US$4.8 billion raised so far this year already exceeds the US$4 billion in all of last year.
Corporate M&A transactions in the solar sector in Q3 were up from 17 to 22, with highlights including SunEdison’s US$2.2 billion acquisition of Vivint Solar and Flextronics’ acquisition of tracking manufacturer, NEXTracker for US$330 million.
Overall projects transactions were down quarter on quarter, with 42 projects totalling US$1.2 billion changing hands in Q3 compared to 66 transactions in Q2 worth US$2.9 billion.