Subsequent to last year’s northern grid collapse, smart grid in India has become a focal point for discussions in the power sector.
The recently released Mercom Capital Group’s report on funding and mergers & acquisition activity for the smart grid sector during 2012 reveals that there was only one Indian transaction – the $183 million acquisition of smart grid and automation solutions provider ZIV Group by electrical transmission and distribution equipment company Crompton Greaves.
Mercom's report shows that after a slow start, venture capital funding in the smart grid sector globally came in at $434 million in 40 deals compared with $377 million in 50 deals in 2011.
There were a total of 66 investors that invested in 2012 compared to 92 investors in 2011. Only six of the 40 deals were early stage transactions compared to 16 in 2011, the report states.
The average VC funding round in 2012 was $10.9 million compared to $7.5 million in 2011. The $136 million raised by Alarm.com skewed the average deal size upward in 2012, it said.
The clean energy communications and consulting firm's findings reveal that despite struggles, home and building automation companies continued to raise a majority of the funding ($198 million in nine deals); followed by demand response ($82 million in 10 deals), grid optimisation ($76 million in nine deals) and advanced metering infrastructure (AMI) companies ($63 million in eight deals).
"It is fascinating to see these three distinct sectors, solar, smart grid and healthcare IT, converge into a single offering - the ‘Connected Home’," said Raj Prabhu, Managing Partner of Mercom Capital Group.
M&As
There were some huge mergers & acquisition transactions in smart grid in 2012, the report states, adding that "though none of them was pure play smart grid companies. They all have smart grid product and service lines."
A total of 23 merger and acquisition transactions were executed in 2012, amounting to almost $17 billion against 30 transactions for almost $5 billion in 2011 and 40 transactions for $1.3 billion in 2010. "The mergers and acquisition activity has been slowing down over the last few years as exits have been sparse," the report says.
The top merger & acquisition transaction in 2012 was the $11.8 billion acquisition of Cooper Industries, a grid and equipment company, picked up by Eaton.