Total corporate funding into the solar sector in Q1 2017 doubled to $3.2 billion, compared to $1.6 billion in Q4 2016. This includes venture capital funding, public market and debt financing.
Year-on-year (y-o-y) funding in Q1 2017 was about 15 per cent higher compared to the $2.8 billion raised in Q1 2016.
Significantly, Indian solar players topped the list of VC-funded companies, which dominated the global solar funding landscape during the period, according to the report on ‘Solar funding and M&A activity for Q1 2017’ by Mercom Capital Group, a leading global consulting firm. ReNew Power was the highest funded company raising VC, debt and project funding in Q1 2017.
“The Q1 funding levels were up in the solar sector from the 2016 lows, largely due to increased debt financing activity. Corporate funding never reached $3 billion in any of the quarters in 2016. M&A activity was also strong with several large deals. Solar public companies also had a good first quarter,” said Raj Prabhu, CEO, Mercom Capital Group. Top VC deals included $200 million raised by ReNew Power Ventures, followed by $155 million raised by Greenko Energy Holdings, Hero Future Energies’ $125 million and Silicon Ranch’s $55 million.
A total of 23 VC investors took part in Q1 2017. Among the notable Indian VC fund transaction in the solar sector, ReNew Power, a renewable energy project developer, secured $200 million funding from JERA, a JV between Tokyo Electric Power and Chubu Electric Power, 2 of Japan’s largest utility firms, for a 10 per cent stake in it.
Greenko Energy Holdings, owner and operator of solar and wind projects, raised $155 million from an affiliate of GIC and an entity that is ultimately wholly-owned by the Abu Dhabi Investment Authority (ADIA).
The ADIA subsidiary will invest $31.1 million, while GIC will put in $123.9 million, retaining its position as the majority shareholder of Greenko.
Hero Future Energies, the renewable energy subsidiary of Hero Group, got $125 million in equity investment from IFC, while Oriano Solar, a provider of EPC services in India, raised $3.1 million from the Small Industries Development Bank of India’s Samridhi Fund.
When it comes to debt financing, ReNew Power, raised $475 million through its subsidiary Neerg Energy, by selling green bonds to overseas investors, as the company plans to refinance its debt from 13 green projects
Welspun Renewables Energy, a renewable energy project developer acquired by Tata Power (an electric utility firm), raised $176.27 million through issuance of non-convertible debentures on a private placement basis, the Mercom Capital Group report pointed out.
Besides VC funding and debt financing, ReNew Power also secured $390 million from ADB for the development of renewable energy projects in India.
With the financing, the firm will develop solar projects with a combined capacity of 398 mw in Jharkhand and Telangana and wind power projects with combined capacity of 311 mw in AP, Gujarat, Karnataka and MP.
Solairedirect, a French solar project developer, through its special purpose vehicle Solaire Surya Urja, secured $100.4 million loan from IDFC for construction of its two solar projects totalling 140 mw at the Bhadla Solar Park in Rajasthan.
There were few M&A transactions as well in the Q1. Major among them was India Power Green Utility, an arm of India Power, an electric utility, which acquired a 49 per cent stake in two solar project firms.