Modest recovery in investment levels as public markets show
New clean energy investment increased 7% on the previous quarter to $50.4 billion
Large energy efficiency acquisitions boost M&A volumes to $17.9 billion
Public markets finally show signs of life
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London and New York - July 11, 2013 (Investorideas.com renewable energy stocks newswire) Clean Energy Pipeline, the online daily financial news and data service dedicated to the clean energy sector, today releases its preliminary analysis of venture capital, private equity, project finance, mergers and acquisitions and public markets activity during 2Q13. A copy is available for download here.
Investment in the global clean energy sector totalled $50.4 billion in 2Q13, a 7% increase on the $47.2 billion invested in 1Q13 but a 27% decrease on the $68.9 billion recorded during the corresponding period in 2012. Despite the quarterly increase, investment is still 26% below the $68.2 billion quarterly average volume of investment between 2010 and 2012.
"Investment levels in 2Q13 indicate that the sharp decline in activity in 1Q13 was not a one off," commented Douglas Lloyd, CEO of Clean Energy Pipeline. "Investment in South Africa and Latin America this quarter shows that emerging markets are growing fast, but this growth is insufficient to offset declining investment levels in Europe and North America . The weak level of investment during the first half of 2013 suggests that total investment this year will hit a four-year low."
Project finance stalls as Europe hit four-year lows
Project finance totalled $25.7 billion in 2Q13, in line with the $25.2 billion invested in 1Q13 but 40% below the $42.5 billion invested in 2Q12. The lacklustre level of new investment was caused by Europe hitting a four-year investment low and North America recording its second lowest quarter for investment during the past four years. Some $6.5 billion of project finance was invested in North America in 2Q13 compared with $4.5 billion in Europe.
In North America , project finance was subdued because of an absence of investment in wind energy projects. Only four wind projects secured financing in 2Q13 totalling $1.4 billion, significantly less than the 16 projects that secured $4.9 billion in the corresponding period in 2012. The pipeline of financeable US wind energy projects is still weak due to the delayed renewal of the US wind energy production tax credit late last year.
Investment in Europe was impacted by a severe drop in investment in solar and onshore wind projects, which collectively have accounted for around 70% of total European project finance in the past four years. Investment in European solar fell 32% quarter-on quarter to $1.4 billion in 2Q13, while investment in onshore wind fell 29% quarter-on-quarter to $1.9 billion. Both sectors have been adversely affected by subsidy cuts in major markets such as Italy , Germany and Spain.
Beyond Europe and North America the mood is brighter. After plummeting in 1Q13, investment in Chinese renewable energy projects more than doubled to $7.6 billion in 2Q13. This is well below the $12.3 billion average quarterly investment volume in 2011 and 2012, but still a sign that growth is returning to China ’s renewable energy sector.
Large energy efficiency acquisitions boost M&A
Clean energy M&A activity reached $17.9 billion in 2Q13, a 49% increase on the $12.0 billion recorded in 1Q13 and an 81% increase on the $9.9 billion tracked during the corresponding period in 2012. This increase was underpinned by a series of large acquisitions – seven deals over $500 million totalling $9.0 billion in value were announced in 2Q13. This compares with three similar sized deals totalling $1.7 billion in the previous quarter. Energy efficiency was the largest sector for M&A, accounting for 27% ($4.8 billion) of the total value of M&A activity.
Asian investors continued to be active in 2Q13, announcing four acquisitions of non-Asian assets totalling $2.4 billion in 2Q13, significantly more than the quarterly average volume of Asian cross-border acquisition activity in 2012 ($1.6 billion) and 2011 ($1.1 billion).
Public markets come back to life
Clean energy companies secured $3.6 billion on the public markets globally in 2Q13, through a mixture of IPOs, secondaries and convertible notes. This represents a significant increase on the $586 million secured in 1Q13. The two most notable deals were Mighty River Power, which secured $1.4 billion through an IPO on the New Zealand Stock Exchange and Tesla Motors, which secured $1.0 billion through a combination of a $660 million convertible note offering and a $360 million secondary share offering.
Venture capital and private equity still in the doldrums
Venture capital and private equity investment in clean energy (excluding buyouts) totalled $1.6 billion in 2Q13, a 7% decrease on the $1.7 billion recorded in 1Q13 and a 22% decrease on the $2.1 billion invested in the corresponding period in 2012. Investment is now at its lowest quarterly level since 2009.
Energy efficiency was the largest sector for investment, accounting for 23% of the total value of new investment in clean energy. Notable deals included green building company Blu Homes, which secured $65 million from Brightpath Capital Partners LP and Skagen Global and energy saving glass company View Inc., which secured $62 million from a consortium of investors including Khosla Ventures LLC, Sigma Partners LLC, GE Energy Financial Services and Corning Inc.
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Founded in 2005, Clean Energy Pipeline is an independent provider of online financial news and data globally. Clients include governments, multinational and privately owned companies, investment banks, law firms, venture capital private equity and hedge funds in over fifty-five countries. In addition to its online news and data service, the company offers customized research and organizes senior executive forums.
VB/Research Wells Point, 79 Wells Street, London W1T 3QN
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