Global corporate funding up by 15% at $5.3 bn in the first half of 2018

The corporate funding, including PE and M&A, in the solar energy sector in India, has seen an investment of $380 million during the first half of the year 2018, after a strong growth of $3.6 billion last year. The M&A (mergers and acquisitions) deals, mainly four including the Hinduja Group acquisition of Kiran Energy, have grown to $2.6 billion during the first half of the year, one of the largest in the last four years.

According to data from Mercom Capital Group, Llc, a global clean energy communications and consulting firm, the total global corporate funding, including venture capital funding, public market, and debt financing, in the first half of 2018, was up at $5.3 billion compared to the $4.6 billion raised in first half of 2017, a 15 per cent increase year-over-year.

The first half of the year saw around four VC funding worth over $16 million and three debt financing deals worth $364 million in India, it said. There were seven deals in corporate funding in the country, of which six deals which were disclosed has seen a total value of $380 million. There were five deals in project funding, totally worth $507 million during the first six months of the year.  

Commenting on the global market trends, Raj Prabhu, CEO of Mercom Capital Group, said, “The first half of 2018 has been a roller-coaster for the solar industry marked by uncertainty due to Trump tariffs followed by the recent Chinese subsidy pullback”. “Though financial activity was better compared to the same period last year, the market is still sorting out the winners and losers that would come out of a potential slowdown in Chinese demand, which is expected to result in an oversupply situation and eventual price crash in components across the globe,” he added.

The 12 months of 2017 saw the highest amount of corporate funding, at $3.62 billion in 18 deals, compared to $452.8 million disclosed in seven out of nine deals in 2016 and $673.5 million in 10 out of 14 deals disclosed during 2015.

The debt funding during the period in India was led by Sunsure Energy, a solar turnkey solutions provider, raising zero-collateral based debt capital worth $2.2 million from Tata Cleantech Capital, L&T Finance, and cKers Finance. A notable project funding deal during the period was Azure Power, an Indian renewable energy project developer, raising $135 million in debt financing from a consortium of development finance institutions to finance around 200 MW of Azure Power’s rooftop solar PV projects across India. The line of credit was led by International Finance Corporation, FMO – the Dutch development bank, Proparco, Oesterreichische Entwicklungsbank.

The project acquisition deals during the period include Fortum, a clean energy company, signing an agreement to sell 54 per cent share of its solar power company operating four solar projects in India to UK Climate Investments (40 per cent) and Elite Alfred Berg (14 per cent). Elite Alfred Berg has the option to buy up to an additional 16 per cent from Fortum. The total capacity of this portfolio is 185 MW. The total consideration from the divestment of the 54 per cent stake on a debt and cash free basis, including the effect of deconsolidating Fortum's minority part of the net debt, is expected to be approximately $177 million.

ReNew Power, an Indian renewable energy project developer, acquired solar and wind energy project developer Ostro Energy. The acquisition is valued at close to Rs $1.63 billion and was supported with financing of $247 million from the Canada Pension Plan Investment Board. The Greenko Group, an owner and operator of solar and wind projects, acquired Orange Renewables. The deal is for an enterprise value of approximately $1.02 billion, which includes $680 million of debt which will be taken over by Greenko from Orange.