PwC: Renewable energy and cleantech enterprises see increasing growth opportunities from the capital market

42 PE/VC investments and 10 IPOs took place in renewable energy and cleantech industry in Q1 2017

Beijing, 23 Jun 2017 - According to PwC's MoneyTree™ China Renewable and Cleantech Investment Report (Q1 2017) (the "Report"), China's renewable energy and cleantech industry experienced strong investment momentum in Q1 2017, driven  by the recovering PE/VC market as well as strengthening of the capital market. The first quarter recorded a total of 42 PE/VC investments, 28 M&As (with 10 PE/VC-backed), a record-breaking IPOs at 10 in Q1 2017.

In Q1 2017, policies and regulations supporting China's renewable energy and cleantech industry focused predominantly on the energy sector with a rollout of a top-down design. The National Energy Administration (NEA) issued the 13th Five-Year Plan for energy development on 13 January 2017. The NEA set goals in energy technology innovation, and provides important guidelines for advancing China's energy technology revolution in the next five years. Additionally, the NEA released measures to deepen reform of investments and fundraising mechanism of the energy sector on 27 March 2017. The aim is to encourage greater non-government capital in energy investments, and facilitate the development of the energy sector through finance and capital vehicles.

Lisa Wang, PwC China Power & Utilities Partner noted, "Regulators fully affirms the key role of energy investment and fundraising towards stabilising growth, adjusting structures, improving people's livelihood, and promoting  supply-side structural reform. These policies and regulations are of great significance to energy investment and fundraising reform, also conductive to building a fair and competitive platform between private and state-owned enterprises. In view of these policies and regulations, they are expected to solve the fundraising difficulties for state-owned enterprises, and accelerate the adoption of the government-backed social capital cooperation (PPP) model."

The Report indicates that a total of 42 PE/VC investments occurred in Q1 2017, with total investments of USD 381 million. Among them, 23 investments, or 54.8%, occurred in the environmental protection sector. For the first time, environmental protection, new energy and new material sectors shared approximately equal weight in investment value, representing 36.7%, 25.6% and 35.8% respectively. Similar to earlier quarters, enterprises listed on the NEEQ and other public markets continue to be targets of PE/VC investment in Q1 2017.

The Report highlights 28 mergers and acquisitions (M&A) in Q1 2017, with the total value of disclosed M&A deals amounting to USD 1.326 billion. Among the 28 M&A deals, only one was a cross-border transaction, with the remaining nine of domestic transactions. The environmental protection sector posted an eye-catching performance with 17 transactions valued at USD 871 million, accounting for 60.7% and 65.7% of the total number of deals and transaction value respectively. It is worth mentioning that in Q1, the largest two M&A deals in China's renewable energy and cleantech industry came from environmental protection sector. In sources of funding, 10 M&A deals were backed by PE/VC investors.

China's renewable energy and cleantech industry reached a new high with 10 IPOs recorded in Q1 2017, the strongest quarter since 2014 recorded by the report. In contrast, average fundraising volumes declined dramatically, down by nearly 80% from the average level in 2016. Among the 10 IPO enterprises, 1 went public on the HKEx Main Board, with the remaining 9 listed on Shanghai and Shenzhen stock exchanges. Notably, enterprises listed on NEEQ recorded highest average fundraising volume, at the US$126 million mark.

Lisa Wang added: "The investment mania in China's renewable energy and cleantech industry is aligned with the private equity market's recovery in the first quarter. With the 'actively developing Growth Enterprise Market (GEM) and NEEQ' written into the 2017 government work report, the number of enterprises raising funds through NEEQ have risen by 50% year-on-year in Q1 2017. In the first quarter, PE/VC investments enjoyed robust growth with both IPO and M&A activity both active, whilst creating opportunities for investors to withdraw. As regulators are encouraging the use of investment and fundraising vehicles, we expect to see a growing number of enterprises benefit from the capital market. "

Download the full report and see more details at: http://www.pwccn.com/zh/industries/energy-utilities-and-mining/publications/moneytree-cleantech-report-2017-q1.html
 

Notes:

Definition and classification of renewable energy and cleantech sectors in the Report:

Sub-sector

Description

Environmental protection

Environmental protection sector covers energy saving and environmental protection:

Energy saving refers to all products, equipment, technologies and services for saving energy or improving energy efficiency, such as smart power grids, LED, new energy automobiles, energy-saving services and other energy-or-electricity-saving products and technologies.

Environmental protection refers to water/sewage treatment, air/environment protection, solid waste management, noise abatement, soil protection, online environmental monitoring systems, etc.

New energy

New energy mainly refers to non-fossil energy, including distributed energy resources and renewable energy sources (hydro power projects excluded), such as solar energy, wind energy, biomass energy, nuclear energy, etc.

New materials

New materials include novel functional materials, high performance structural materials, ultrafine powder, nanometer materials, etc.

Others

Industry origins are not disclosed.

Contact us

Vivian Huang
Deputy Manager
Tel: +[86] (10) 6533 8198
Email

Follow us