VC funding fluctuates but downstream and third party continue popularity

The funding focus for solar continued to be on downstream projects in the second quarter of the year as the third party solar success story continued.

According to the latest quarterly survey from Mercom Capital Group, volatility remains in VC funding – which surged to US$189 million from $126 million but saw the number of deals drop from 26 to 19 – but solar leasing enjoyed another bumper fundraising period.

A record $1.33 billion was raised by third party solar companies meaning they have raised almost as much in the first half of 2013 as they did throughout 2012.

And Warren Buffet‘s well-publicised foray into the sector is doing wonders for bankability with Solar Star Funding, a wholly-owned subsidiary of Buffet’s MidAmerican Energy, completing the largest solar bond finance deal to date with a US$1 billion offering in the second quarter.

Downstream activity accounted for $128 million of the $189 million raised with Chinese company Hefei Golden Sun Energy Technology landing the biggest financing round with $69 million. Clean Power Finance raised $42 million with a big gap to the third biggest deal, Solexel raising $14.8 million. Tigo Energy raised $13 million and Sinfiniti, with $10 million, rounded off the period’s biggest five deals.

As Hefei topped the pile, Chinese banks backed solar to the tune of $259 million to reach a total of around $53 billion but continuing the sharp decline seen since 2010.

Swiss company ABB’s $1 billion acquisition of inverter company Power-One dominated M&A activity from April to June forming the biggest chunk of the $1.27 billion worth of 18 deals, with more than half of the transactions undisclosed.

Strategic acquisitions and swoops for distressed companies and assets were M&A themes on top of the consolidation in the inverter market.

Some 670 MW of projects changed hands with 35 announced large scale project funding deals.

Total corporate financing for the quarter amounted to $915 million, according to Mercom.