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Green Energy Sector Weekly Update: Investment Banks Responding to Increase in Green Investments

There’s a trend that’s been fueling a lot of merger and acquisition deals, not just this week but over the past couple of years (since the dark days of September 2008). It goes something like this: Small, promising renewable energy developer with promising technology or project pipeline but a balance sheet too thin to interest banks and secure debt financing needs long-term capital. In steps a larger company, eager to boost its green investments and with the steady revenue and attractive balance sheet the developer is missing.

Access to long-term funding has motivated lots of deals over the past couple of years between small, venture-backed renewable energy companies and much larger industrial groups.

It’s what pushed Austra Solar into the arms of French nuclear developer Areva. It also motivated First Solar’s acquisition of NextLight Renewable Power and last year’s purchase by NRG Energy of Bluewater Wind, the offshore wind developer.

This quest for funding also motivated deals announced this week, including United Technologies’ (UTC) purchase of all outstanding shares of California wind turbine maker Clipper Windpower. The UTC bid values Clipper at approximately £139.5 million ($220.7 million). UTC had been mulling an acquisition for a while. Back in March the company had pushed for and gotten the appointment of one of its own, Mauricio Quintana, as CEO. And earlier this summer, Clipper, beset by steep treasury problems, pressed UTC for a loan. In announcing the deal Quintana said, “the acquisition will enable Clipper to fully leverage UTC’s management and operational expertise as well as its world-class technology in blades, turbines and gearbox design,” or simply said, UTC has enough cash to support Clipper and will use the company as a platform to grow our green business.

Wall Street investment banks are responding to this wave of green M&A deals by launching dedicated renewable energy and cleantech groups. UBS did just that a few weeks ago, as did Lazard and Moelis & Company this past summer.

This quest for long-term funding doesn’t necessarily take the M&A route but can sometimes take the form of a looser strategic partnership. That’s the route solar power plant developer BrightSource Energy took with its announcement this week that it had forged a commercial partnership with French energy and transportation giant Alstom. Earlier this year Alstom invested $55 million in BrightSource. This venture brings BrightSource proven and ready-made distribution channels to sun-drenched markets in Europe, the Middle East and North Africa. Going it alone, void of Alstom’s commercial backing, would have been a much more expensive and riskier proposition that BrightSource probably couldn’t even afford in the first place.

The much-awaited Initial Public Offering (IPO) of Italian green giant, Enel Green Power launched this week. The €3.4 billion ($4.7 billion) IPO was more than two years in the making and is the largest green IPO since 2007 and a real bellwether on investor confidence for renewable energy stocks. J.P. Morgan, Bank of America and Morgan Stanley are underwriting that transaction.

VC and PE Watch

London-based private equity firm Terra Firma acquired solar photovoltaic developer Rete Rinnovabile from Terna, the Italian grid operator.

1366 Technologies, a Massachusetts solar panel maker, raised $20 million in a Series B from Korea’s Hanwha Chemical and Ventizz Capital Fund.

Ice Energy, a developer of distributed energy storage solutions, held the first close of a $24 million Series C financing led by TIAA-CREF.

London-based I2BF, a European cleantech-focused fund with $100 million under management, is opening a U.S. office in New York.

Rambling

This week we gathered some new details on Duke Energy and Integrys Energy Services’ $180 million solar power venture. An industry source told us that the two companies are close to securing financing to construct an initial two projects. Duke’s solar effort is interesting in that the North Carolina company has opted to back rooftop solar projects and not just utility-scale facilities. Developing rooftop facilities will provides Duke and Integrys seamless access to grid infrastructures in lucrative power markets. The “rooftop route” will save Duke and Integrys time and money and a quicker return on their investment.

By. Green Energy Reporter




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