Cleantech Alert: 3Q13 Analysis – New clean energy investment hits four-year low as project finance stalls
New clean energy investment posts 9% quarterly decrease to $47.0 billion, a four-year low
Project finance slumps to $24.7 billion, the lowest quarterly level since 1Q09
IPO activity hits two-year high of $2.5 billion
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London and New York - October 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 3Q13. A copy is available for download here. New investment in the global clean energy sector totalled $47.0 billion in 3Q13, a 9% decrease on the $51.8 billion invested in 2Q13 and a 20% decrease on the $58.8 billion recorded in the corresponding period in 2012. Total investment is now at its lowest quarterly level since 2Q09.
"For the third consecutive quarter new investment in the global clean energy sector has fallen below rolling average quarterly investment levels," commented Douglas Lloyd, CEO of Clean Energy Pipeline. "This is a direct result of a sharp decline in utility-scale project finance deals in North America and Europe . On a brighter note, IPO activity has bounced back hitting its highest quarterly level for the past two years in 3Q13."
Public market activity rebounds
Clean energy companies secured $3.1 billion on the public markets globally in 3Q13, through a mixture of IPOs, secondaries and convertible notes. While this represents a 23% decrease on the $4.0 billion secured in 2Q13, the volume of capital raised in 3Q13 is more than double the quarterly average ($1.5 billion) secured in 2012.
The resurgence in public markets activity has been underpinned by a wave of IPOs. In 3Q13 IPOs represented 81% of funds raised on the public markets. Notable deals included NRG Yield Inc., which secured $495 million in July 2013 through an IPO on the New York Stock Exchange and Brazilian renewable energy company CPFL Energias Renováveis, which raised $462 million also in July through an IPO on the BM&Fbovespa exchange.
Importantly, the IPO pipeline looks promising. The largest is New Zealand state-owned utility Meridian Energy, which hopes to raise $1.9 billion through the floatation of 49% of its shares by the end of October. Other IPO prospects include SunEdison, which has filed for a $250 million IPO for its silicon semiconductor wafer business, Norwegian polysilicon producer REC, which has announced plans to publicly list its photovoltaic manufacturing unit in October 2013, and UK asset manager Foresight Group, which has published the prospectus for the $320 million IPO of its solar fund.
Project finance dips to four-year low
Project finance totalled $24.7 billion in 3Q13, a 7% decrease on the $26.7 billion recorded in 2Q13 and a 21% decrease on the $31.4 billion invested during the corresponding period last year. Project finance investment is now at its lowest level since the first quarter of 2009.
The decline was caused by North American project finance falling to $5.7 billion in 3Q13, its lowest level since the first quarter of 2009. This is primarily the result of US solar project financing hitting a three-year low of $1.4 billion. On a more upbeat note, US wind project financing doubled quarter-on-quarter to $2.4 billion as developers rushed to get projects financed to ensure they qualify for the wind energy production tax credit.
Global project finance was also impacted by lacklustre investment in Europe . Only $7.1 billion was invested in European renewable energy projects in 3Q13, the third lowest quarterly level during the past four years. This is due to subsidy cuts in the major markets including Germany , Spain and Italy as well as emerging renewable energy markets such as Romania , Poland and the Czech Republic over the past year.
The largest deals in 3Q13 involved the re-financing of operational assets. Continental Wind closed a $613 million non-recourse project financing of its 667 MW portfolio of 13 operational wind farms located across the USA in September 2013, while Meridian Energy completed the $481 million refinancing of its 50% stake in the 420 MW Macarthur wind farm located in Australia in July 2013.
M&A deal values fall although deal numbers remain robust
Clean Energy M&A activity totalled $8.9 billion in 3Q13, under half the $18.3 billion worth of acquisitions announced in 2Q13 and a 44% decrease on the $16.0 billion of deals announced in the corresponding period last year. The decrease was due to an absence of mega-deals. Only three acquisitions over $500 million valued at $1.8 billion were announced in 3Q13, significantly below the eight $500 million-plus deals valued at $9.6 billion last quarter.
However, the number of announced acquisitions increased 2% quarter-on-quarter to 261. This equates to an 18% increase on the quarterly average number of announced deals since the beginning of 2009.
Venture capital and private equity hits four-year low
Venture capital and private equity investment in clean energy (excluding buyouts) totalled $1.0 billion in 3Q13, a 39% decrease on the $1.7 billion invested in 2Q13 and a 58% decrease on the $2.4 billion invested during the corresponding period last year. Investment is now at its lowest quarterly level since 2009.
Solar was the largest sector for investment, accounting for 25% of the total value of clean energy investments in 3Q13. Notable deals included crystalline silicon PV company Solexel, which secured $40 million from undisclosed investors, and concentrating solar power technology company eSolar, which closed a $22 million funding round lead by Oak Investment Partners.
For further information on this press release and to receive a copy of the data on which this press release is based, please contact:
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 Tweet: @CEPipeline
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