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Clean Tech Investments Plunged in 2012

By Environmental Finance | Sun, 06 January 2013 00:00 | 0

Global investments in clean technologies tanked in 2012, as investors shied away from capital-intensive deals and technology risks, according to Cleantech Group.

The San Francisco-based analysis firm’s preliminary 2012 results recorded venture capital (VC) investments of $6.5 billion in the clean-tech sector, down from the record $9.6 billion in 2011.
The number of deals seen in 2012 were 704, 15% lower than the 829 tracked in the previous year.
Clean-tech mergers and acquisitions (M&A) deals have consistently dropped in value over the past eight quarters, and totalled $39.7 billion in 2012.

“2012 was a difficult year for the sector,” Sheeraz Haji, CEO of Cleantech Group, said in a webinar presenting the figures. Early last year, the firm predicted that 2012 would be a record-breaking year for clean-tech investment.

Factors that hurt clean-tech investments were difficult macroeconomic conditions, the low price of natural gas in the US and the commoditisation of solar modules, he explained.

“There is a trend away from solar and towards things like green chemicals, transportation and energy efficiency,” he said. “Energy efficiency is still very much the most popular category, which really makes sense since investors are favouring capital-light deals.”

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These trends are set to remain in 2013, Haji said, when he expects water, waste-to-energy and ‘clean web’ – referring to software, applications and data analytics to improve, for example, the efficiency of traffic systems – to be winners, rather than expensive technologies, like solar.

In 2012, investors favoured the biofuels and biochemicals sector, which attracted $952 million in 53 deals. The largest deal was the $144 million going to Sapphire Energy, a California-based developer of algae biofuels, from Monsanto, ARCH Venture Partners, Venrock Associates, among others.

Some $927 million was invested in the transportation sector, with California-based Fisker Automotive, which makes luxury electric cars, raising $381 million in a VC round. Energy efficiency companies raised $907 million of investment in 140 deals.

The most active VC investor in 2012 was Kleiner Perkins Caufield & Byers, which was involved in 25 financing rounds, followed by Draper Fisher Jurvetson and Khosla Ventures with 22 and 18 rounds, respectively, Cleantech Group said.

In terms of investments by regions, North American companies raised $5 billion, down 30% on 2011, and investment in Europe and Israel fell 23.6% to $1.1 billion compared with the previous year.

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But the biggest loser was the Asia Pacific region, where companies raised $300 million in 44 rounds in 2012 – 67% less than 2011’s $910 million.

“The start-up scene [in Asia] is not as mature and not as easy to invest in as in North America and Europe,” said Haji. “There is certainly a challenge to get good information” about companies and the market there, he added.

Meanwhile, the clean-tech initial public offering (IPO) scene was very bleak in 2012. “The IPO window has effectively been shut in 2012,” Haji said. Some 37 clean-tech companies raised money on the public markets in 2012, compared with 51 in 2011 and 89 in record year of 2010.

Ten clean-tech companies withdrew their planned IPOs this year, several citing difficult market conditions and the desire to raise private funding instead.

But towards the end of the year, US company SolarCity, which leases solar systems to households, pulled off a successful IPO and its shares traded well above its offering price yesterday.

“SolarCity was perhaps a significant milestone. Perhaps this is the bottoming out and we’ll see a very strong 2013,” in terms of clean-tech investments, said Haji.

By. Elza Holmstedt Pell

http://www.environmental-finance.com/news/view/3025

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