Corporate funding in the Energy Efficiency sector surged higher in 2015, more than doubling to nearly $1.2 billion in 14 transactions. That compares to $410 million in 11 transactions in 2014, according to Mercom Capital’s ¨Smart Grid, Battery/Storage, Efficiency Funding and M&A 2015 Fourth Quarter and Annual Report.¨ VC funding for the Energy Efficiency sector increased to $852 million in 67 deals compared to $797 million in 80 deals in 2014.
Debt and public market financing accounted for nearly 60% of total venture capital (VC) and corporate funding of energy efficiency companies. That’s a good sign the market is maturing and that bankers and investors are becoming more comfortable with risks and rewards in the clean energy market segment.
M&A activity in the energy efficiency sector nearly doubled as well, rising from 26 to 45 transactions year over year (YoY) though transaction amounts were disclosed for only 22. Furthermore, five energy efficiency securitizations valued at $801 million were completed. That brought total energy efficiency securitizations since 2014 to over $1 billion in seven deals.
Mercom’s 2015 Smart Grid, Battery/Storage, Energy Efficiency Highlights
- Total corporate smart grid sector funding, including debt and public market financing, dropped a sharp 37.6% to $527 million from $844 million.
- VC funding in the smart grid sector (including private equity and corporate VC) rose 10.7% YoY to total $425 million in 2015.
- Average transaction size also rose, with Mercom tracking 57 deals last quarter as compared to 74 a year ago.
- Battery/energy storage companies raised $397 million, down 7.9% YoY. Deal numbers were up by three as compared to Q4 2014’s 34.
- Corporate funding totaled $676 million, a steep 26.6% lower than Q4’14’s $921 million.
- Electro Power Systems was the sole IPO in the battery/storage market segment, in which the company raised $15.6 million.
- FuelCell Energy announced a project finance fund of $30 million.
- 11 M&A transactions took place in Battery/Storage, four of which were disclosed. Total value was $2.4 billion compared to 18 M&A transactions (six disclosed) in 2014 for $232 million. The $2.2 billion acquisition of Polypore International’s energy storage business by Asahi Kasei was the largest.
- VC investments in energy efficiency companies rose to $852 million from $797 million in Q4 2014, a 6.9% YoY rise. Transactions totaled 67 in Q4’15 as compared to 80 in the year-ago fourth quarter.
- Corporate funding totaled more than $2 billion,
- Lighting companies raised the most VC capital in Q4 – $187 million in 23 transactions.
- A total $168 million of capital was raised via two IPOs: MLS raised $154 million and BuildingIQ raised $14 million.
- The largest energy efficiency sector M&A deal was GO Scale Capital Investment Consortium’s $2.8 billion, 80.1% equity stake in Lumileds. Lighting companies were involved in all of the top four energy efficiency sector M&A deals in 2015.