Smart grid has become a buzz word in the power sector today, with venture capital funding in the category showing signs of growth.
The smart grid venture capital funding in the third quarter of 2012 was at $238 million in 12 deals, while merger and acquisition activity during the same period totalled $2.2 billion in five transactions.
This has been brought out in Mercom Reports on Smart Grid Sector Funding and M&A Activity for third quarter 2012. Mercom Capital Group, llc, a global clean energy communications and consulting firm, recently released its report.
The notable Indian deal was the $183 million acquisition of smart grid and automation solutions provider ZIV Group by electrical transmission and distribution equipment company Crompton Greaves -- the Indian conglomerate.
The top M&A transactions was the $2-billion acquisition of Vivint, a home automation services company, by Blackstone, and the $183-million acquisition of smart grid.
“We will also be watching for strategic M&As in this area as companies look to add service and technologies needed to compete,” said Raj Prabhu, Managing Partner at Mercom Capital Group.
The rise in venture capital funding was mostly due to $136 million raised by Alarm.com, a security and home automation company. The venture capital funding in the last three quarters had been relatively weak (fourth quarter 2011 - $ 66 million in 10 deals, first quarter 2012 – $ 62 million in 10 deals, and second quarter 2012 - $ 66 million in 9 deals), while even without the Alarm.com transaction it exceeded $100 million in the third quarter, the report showed.
“The Alarm.com funding deal and the acquisition of Vivint for $2.2 billion by Blackstone Group is part of a growing trend where home security companies have expanded into home automation,” said Prabhu.
“We expect to see more transactions in this niche where security, cable and telecom companies expand their offerings to cover the whole ‘connected or digital’ home services which would include everything from communication and automation services to solar installations.”
Apart from Vivint and Alarm.com, other companies in the home security and home automation business include AlertMe, Intamax Systems, Control4, iControl Networks, Home Automation Inc., APX Alarm and Xanboo.