A total of $2.2 billion of venture capital and private equity flowed into the clean energy industry worldwide in the first quarter of 2007.
That’s an increase of 57.7% from Q1 2006, and 60% higher than Q4 2006.
Although companies of all stages received increased investment activity, later stage, leveraged private equity investments dominated.
Later stage deals contributed $1.4 billion (up 44% on Q1 2006), while earlier stage deals rose 23%. Over-the-counter transactions were up 48% to $97.3m. Private Investments in Public Equities, or PIPE transactions, more than tripled from $142.9m to $446.4m. By contrast the Public Markets saw 18% less raised in the first quarter of 2007 than in the same period in 2006 ($1.47 billion vs $1.9 billion).
Several large deals took up much of the capital. Solar silicon producer Silicium de Provence received $394m, Imperium Renewables, a US biodiesel producer, accounted for another $113m.
The success of biofuels groups in raising money might seem to run contrary to current investor sentiment on the sector, which has been shaken as oil prices dropped and feedstock costs soared. Money has, however, continued to flow into areas other than US corn-based ethanol: Hawaiian biodiesel in the case of Imperium, and Brazilian biofuels in the case of Brenco, who raised $200m. Meanwhile Ensus, a UK bioethanol plant developer, saw an investment of $150m by Carlyle Group and Riverstone Holdings.
Biomass and Waste-to-Energy, the next biggest recipient of funds, was a long way behind, at $83m, while the other big renewables sector, Wind, was notable for the almost total lack of new VC/PE investment. This does not mean the sector was quiet, with the quarter seeing GE Energy Financial Services investing in France’s Theolia, a bid battle for turbine manufacturer REpower and the sale of Horizon Wind Energy by Goldman Sachs to Portugal’s EDP for $2.9bn.
In venture capital, series A and seed investments of $79.6m were almost double the figure for the same time last year, but only half of Q4 2006’s $158.9m.
News was more mixed on the public markets. Only $899m was raised through initial offerings, much lower than in the previous quarter but an increase on Q1 2006’s $570m.
AIM consolidated its reputation for providing smaller amounts of liquidity to a wide range of companies from across the world – it hosted four deals, the biggest being the $39.2m raised by US electrochemical technology investor Applied Intellectual Capital.
The biggest deal on the public markets was the $413m IPO in Hong Kong of Chinese biofuels producer China Agri-Industries Holdings Ltd while another Chinese group, solar panel cell maker JA Solar Holdings Co, raised $225m on NASDAQ. The quarter’s biggest secondary offering was the $200m raised by German solar system integrator Conergy in Frankfurt, which also hosted the $113m secondary fund-raising from biogas group Schmack.
The amount of money raised in secondary offerings, at $427.3m, was just over one third of the $1.2bn in secondary offerings in Q1 2006. It is possible that PIPEs are partially replacing secondary offerings as a preferred funding method for some public clean energy companies.
Michael Liebreich, Founder and CEO of New Energy Finance, which produced the report, commented: “It has been another very strong quarter overall for in clean energy investment. We are seeing larger deals as investors focus on rolling out the most economic technologies. I see only two areas of concern: the very large number of investors building solar silicon refining capacity, which could move the market dramatically from under- to over-capacity in a few years, and the almost comic numbers of investors chasing relatively small numbers of Series A and Series B technology deals.”
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