Wind Energy Mergers and Venture Capital Funding Take a Nosedive in Q2

Wind energy mergers and acquisitions (M&A) and venture capital (VC) funding nosedived in the second quarter (Q2) of 2012, though large-scale project funding turned in a strong quarter. Announced funding for large-scale wind power projects totaled $5.4 billion in 23 transactions in Q2 as compared to 16 project financings totaling $3.2 billion in Q1 2012. Of the Q2 total, $4 billion was for 21 onshore wind power projects and $1.4 billion was for two offshore wind power projects, according to Mercom Capital Group's “Wind Funding & M&A Q2 2012” report.

On the other hand, just five wind energy mergers and acquisitions (M&A) transactions valued at $93 million took place in Q2 as compared to 11 transactions valued at $872 million in the same period a year ago. Q2 venture capital (VC) funding totaled just $17 million in three transactions as compared to a strong Q1, in which 12 transactions totaling $240 million took place.

Q2 large-scale wind power projects

As a country, the U.S. accounted for the biggest portion of Q2's large-scale wind power project financing (7 of 23). Funding was raised for three large-scale projects in Brazil, three in the UK and one each in Belgium, Canada, Chile, China, India, Italy, Nicaragua, Tanzania, Turkey and Ukraine, Mercom reported.

The largest wind power project financing announced in Q2 was Belgium's Colruyt Group raising $741 million for its 216-MW Northwind offshore wind farm. Lincs Wind Farm Ltd.'s $662 million financing for its 270-MW offshore wind farm and Terra-Gen's $650 million financing for its 300-MW Alta Wind VII & IX wind projects followed.

Other top large-scale wind project financings included Invenergy $444 million financing for its 200-MW California Ridge Wind Energy Project, and the $379 million raised by Iberdrola and Neoenergia for 10 wind farms with a combined capacity of 288-MW, according to Mercom's report.

Among those investing in multiple large-scale wind energy projects in Q2 were Brazil's development bank BNDES, Germany's KfW IPEX-Bank, Union Bank, Bank of Tokyo-Mitsubishi UFJ, BayernLB, World Bank Group member EBRD, the UK's Lloyds, the Netherlands' Rabobank and Spain's Santander.

Debt funding for wind energy companies totaled $26 million in two deals in Q2 as compared to $6.5 million in six deals in Q1 2012. Wind power and advanced grid design and engineering company American Superconductor (AMSC) raised $25 million through the sale of convertible notes and warrants, while wind power project developer Finavera Wind Energy arranged an $850,000 bridge loan with a one-year term at a 7 percent interest rate that also includes the issuance of 2 million share purchase warrants to the lender.

Finavera also closed a $179,460 non-brokered private placement of investment units comprised of one common share and one share purchase warrant with a 12-month term. Italian private equity firm Ambienta's investing around $12.6 million for a 35 percent equity interest in UK offshore engineering company FoundOcean, which provides subsea and offshore foundation grounding for the offshore wind and oil & gas industries.

Q2 wind energy M&A, VC Funding

Looking more closely at wind energy sector M&A, publicly disclosed transactions included China Power New Energy Development Co.'s $60 million acquisition of wind turbine manufacturer Suzlon Energy Tianjin Ltd., and the $33 million acquisition of wind turbine blade manufacturer Tellhow Wind Power by Simomatech.

Seventeen wind energy sector project M&As with a total valuation of $705 million were announced publicly in Q2,according to Mercom. Topping the list were Turkey's Dogan Sirketler Grubu Holding's $301 million acquisition of two Agaoglu Group wind farms with a combined power capacity of 126-MW, and Eurus Energy's $174 million acquisition of AGL Energy's 52.5-MW Hallett 5 wind farm.

Also included among Q2's top wind energy M&A transactions were Sembcorp's $85.5 million acquisition of a 49 percent equity stake in four AES Corp. wind farms with a combined 120-MW capacity, LUKERG Bulgaria's $62 million acquisition of the 40-MW Dobrich wind farm, and Boralex's purchase of AES Southern Europe Holdings' St. Patrick wind farm and three InnoVent projects. Valued at a $42 million, the projects' have a total 90.5 MW of generating capacity.

VC transactions in the wind energy sector included financings for two wind turbine manufacturers: ReGen Powertech raising $9.8 million and a $7.5 million financing completed by Southwest Windpower, Mercom reported.

*Graphic credit: Mercom Capital Group