The total corporate funding in the solar sector, which includes venture capital funding, public market, and debt financing has plummeted by 31% at $1.9 billion (~₹143.4 billion) in Q1 2020 as compared $2.8 billion (~₹211.35 billion) raised in Q1 of 2019. The findings were revealed in Mercom Capital Group’s recently released Q1 2020 Solar Funding and M&A Report. The total corporate funding stood at $2.7 billion (~₹203.79 billion) in Q4 2019.
The report attributed this downturn in funding activity to lower venture capital, and public market financing as the COVID-19 pandemic has affected people and industries across the globe.
“Funding levels dropped in Q1 as the Coronavirus pandemic brought the global economy to a halt. Most large economies are shut down, and there is minimal activity in the solar markets. Solar project M&A was the bright spot in this time of uncertainty, proving once again that solar is a safe long-term bet. The worst may be yet to come, but the hope is that activity picks up in the second half of the year,” said Raj Prabhu, CEO of Mercom Capital Group.
The total venture capital funding in the first quarter (Q1) of 2020 accounted for $145 million (~₹10.94 billion), which included nine deals. This was nearly $31 million (~₹2.34 billion) less than the $176 million (~₹13.28 billion) raised in 13 deals in Q1 2019. The total VC funding totaled $350 million (~₹26.42 billion) from 13 deals in Q4 2019.
The top venture capital deals which grabbed all the headlines in Q1 2020 were the Sunseap deal, in which the Sunseap Group raised a total of $109 million (~₹8.23 billion) in two different deals; cKers, raised $5 million (~₹377.41 million) while $4 million (~₹301.92 million) was raised by Daystar Power.
The solar public market financing plummeted to $22 million (~₹1.66 billion) that was raised in one deal in Q1 2020 as compared to $259 million (~$19.55 billion) in three deals in the first quarter of 2019.
The debt financing also declined with $1.8 billion (~₹135.86 billion) in seven deals as compared to $2.4 billion (~₹181.15 billion) in 19 deals in Q1 2019.
When it comes to mergers and acquisitions, there were 12 solar M&A transactions in Q1 2020, as compared to 18 in Q1 2019.
Out of the total 12 solar M&A announcements made in Q1 2020, 11 transactions involved downstream companies.
The quarter also saw the acquisition of 55 large-scale solar projects (8 disclosed for a total of $4.1 billion), which is more than 54 large-scale solar acquisitions (20 disclosed for $1.4 billion) during the same period in 2019. There were 12 GW of projects acquired during Q1 2020, considerably higher than 10.1 GW in Q4 2019.
Among project acquirers, oil and gas companies were the most active in the first quarter of 2020, acquiring nearly 6,452 MW of solar projects. Investment firms were second with 34% of the share, while project developers picked up 937 MW of projects.
In January this year, Mercom reported that funding activity in the solar sector increased by 20% in 2019, reaching $11.7 billion (~₹883.13 billion) in 117 deals, up from $9.7 billion (~₹732.17 billion) in 139 deals in 2018. The increase in corporate funding was mainly due to substantial debt financing activity in the first and last quarters of 2019 compared to 2018.
Previously, in July 2019, Mercom had reported that in the first half of 2019 (1H 2019), funding activity in the solar sector was on the rise when compared to the same period last year. Total corporate funding (including venture capital funding, public market, and debt financing) for the solar sector globally came to $6 billion in the first half of 2019.