Wind Energy Investment Soars In Q3, But Market Braces For Uncertainty
NAW staff, Thursday 25 October 2012 - 00:00:00
Venture-capital (VC) funding in the wind energy sector jumped to $57 million in six deals in the third quarter, compared to just $17 million in three deals in the second quarter, according to a recently released report
from clean energy communications and consulting firm Mercom Capital Group.
Disclosed VC deals in the third quarter included funds raised by two wind project developers: Mainstream Renewable Power, with $21.5 million raised, and Trishe Developers, with $15.3 million raised.
Large-scale project funding announced in the third quarter totaled $1.1 billion in 11 deals, all of which went to onshore wind projects.
The top large-scale project funding deals announced in the third quarter included $350 million raised by Nareva Renouvelables and Kharabel FZE for the 300 MW Tarfaya Wind Project in Morocco, $165 million raised by Alto Holding for its 120 MW Karaburun Wind Farm in Turkey, and $141 million raised by NuPower Renewables for its 150 MW onshore wind farm in India.
Other top deals were $86 million raised by InfraVest and wpd for the 53 MW Tongyuan Wind Project in Taiwan and the $85 million loan to Newcom for the 50 MW Salkhit Wind Farm in Mongolia.
Only one of 18 large-scale project funding investors - KfW IPEX-Bank - was involved in multiple deals in the third quarter. KfW IPEX-Bank was also involved in multiple deals in the second quarter.M&A activity
In the third quarter, corporate mergers and acquisitions (M&A) activity in the wind energy sector amounted to $53 million in 11 transactions, compared to $93 million in five transactions in the second quarter.
Disclosed M&A transactions this quarter included the $33.2 million acquisition of Canadian wind energy developer Shear Wind by Sprott Power Corp. and the $20 million acquisition of certain assets of Otter Tail Corp.’s wind tower manufacturer DMI Industries by Trinity Industries.
In addition, there were four debt funding deals totaling $359 million announced in the third quarter:
- Suzlon Energy raised $281 million in short-term loans to repay holders of its foreign convertible bonds, signing an 18-month loan facility with 11 lenders;
- Mainstream Renewable Power secured a credit facility of $51 million from Macquarie Group; and
- Broadwind Energy closed on a $20 million credit facility with AloStar Business Credit, and Wind Power Energia received a $7 million loan from Inter-American Investment Corp.
According to Brian Redmond - managing director at Paragon Energy Holdings, a principal investment firm that provides financial advisory and commercial asset management services to the energy sector - policy uncertainty is likely causing wind energy companies to join forces or acquire assets.
"The relatively large number of wind M&A deals in Q3 - 11 deals - and the smaller average deal size - $4.8 million - indicates to me that factors are driving market participants to join forces or are providing attractive opportunities to acquire development assets or projects," Redmond explains.
"Specifically, companies are paring down their development portfolios and rationing costs in the face of [production tax credit] uncertainty, lower energy prices and depressed energy demand,” he adds.
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