Cleantech investment totals rise 45%

More than $5bn was invested in cleantech and renewable deals by private equity and venture firms during the second quarter.

Venture capital and private equity funds invested more than $5 billion in cleantech and renewable energy companies globally in the second quarter of 2010, a slight decline over the previous quarter, but 45 percent more than in the corresponding period last year.

The quarter gone by was a good one overall for M&A activity in the sector, with 152 completed transactions valued at $14.5 billion, according to a study by VB/Research, a London-based data and research service.

The firm expects M&A transaction activity to remain strong in the coming months. “Overcapacity and fragmentation, particularly in China, among wind component and solar module manufacturers is expected to drive consolidation,” Douglas Lloyd, CEO of VB/Research, said in a statement.

“In parallel, with public markets remaining fragile, M&A remains the only viable exit option for financial investors,” he added.

China also accounted for a significant proportion of new financial investments in renewable energy projects during the period, and for three of the top five public market transactions globally, the study revealed. Worldwide project finance totalled $29.6 billion, up from $20.4 billion in the previous quarter, with wind and solar collectively accounting for 75 percent of total activity in the sector.

Venture capital transactions in the sector accounted for about $2.2 billion worth of investments, similar to the amount invested in the first quarter of the year. However, while the second quarter saw a 31 percent decline in early-stage investments, it saw a 63 percent increase in the value of late-stage investments.

In terms of private equity investments in cleantech and renewable energy, the second quarter witnessed a 23 percent increase in the amount invested for development capital purposes and was marked by a 9 percent decline in the amount invested in buyouts. However, development capital investments increased by 33 percent and the value of buyout investments rose by 52 percent year-on-year.