5th October 2012 – According to VB Research, global clean energy investment suffered in 3Q12, with project finance, venture capital & private equity (excluding buyouts) and public markets activity all falling to their lowest quarterly levels since 1Q09. Project finance totalled $27.3 billion in 3Q12, a 28% quarterly decrease, while public market listings fell 43% quarter-on-quarter to $1.2 billion. In comparison venture capital & private equity investment (excluding buyouts) performed well, posting a 6% quarterly decrease to $1.7 billion. The one positive was the total volume of M&A activity, which surged 65% quarter-on-quarter to $16.2 billion due to a series of large deals in the recycling and waste and energy efficiency sectors.
“Investment activity was disappointing but not unexpected last quarter. It’s a brutal environment to raise capital when you factor in major policy uncertainty and low natural gas prices in the US, feed-in tariff cuts in Europe and an overall crisis of confidence in the global financial markets,” commented Douglas Lloyd, CEO of VB Research. “A 30% drop in project finance in Asia last quarter, which had been propping up global investment volumes in recent quarters, didn’t help.”
Project finance slumps to three-year low
Global clean energy project finance fell to $27.3 billion in 3Q12, the lowest quarterly level since 1Q09. This represents a 28% decrease on the $37.8 billion recorded in 2Q12 and a 52% decrease on the $56.7 billion invested in the corresponding period in 2011.
M&A boosted by mega deals
Global clean energy M&A activity totalled $16.3 billion in 3Q12, an impressive 68% increase on the $9.7 billion transacted in 2Q12 but a 30% decrease on the $23.2 billion recorded during the corresponding period last year. There was a 7% uptick in the number of announced deals to 212 in 3Q12, up from 198 announced in the previous quarter. The sizeable quarterly increase in total deal value was due to four $1 billion dollar plus deals aggregating $6.3 billion being announced in 3Q12, compared with two with a combined value of $3.4 billion last quarter.
Large M&A deals were particularly dominant in the recycling and waste sector – 16 companies in this sector were acquired for a combined $4.5 billion in 3Q12, the highest quarterly level ever recorded. This increase was underpinned by Star Atlantic Waste Holdings’ $1.9 billion purchase of Veolia ES Solid Waste Inc., and Waste Connections Inc’s $1.3 billion acquisition of R360 Environmental Solutions.
Venture capital & private equity hits new low
Global venture capital and private equity investment in clean energy (excluding buyouts) fell for the fourth consecutive quarter to $1.7 billion in 3Q12, a 6% decrease on the $1.8 billion secured in 2Q12 and a 60% decrease on the $4.2 billion tracked in the corresponding period last year. Worryingly for early-stage clean energy companies, venture capital investment in Series A-C rounds fell to a mere $382 million in 3Q12, the lowest quarterly volume since 2009.
Public markets activity hits lowest level since 1Q09
Clean energy companies secured $1.1 billion on the public markets in 3Q12, through a mixture of IPOs, secondaries and convertible notes. This is under half the $2.1 billion secured in the previous quarter and a quarter of the $4.8 billion tracked during the corresponding period last year. As in previous quarters, Chinese companies dominated the clean energy IPO landscape – three out of the five IPOs completed in 3Q12, representing 92% of all funds raised, involved Chinese companies.
Source: VB Research press release, 04/10/2012