Global clean tech investment soars 32 per cent during 2009

Global investment in clean technology grew 32 per cent to $381bn last year despite the economic turmoil that dominated 2009, according to a major new report that analysed M&A and financing deals across the clean tech sector.

The study from analyst firm GlobalData concluded that investment growth was primarily driven by new climate and energy legislation from governments worldwide, as well as the Chinese government's high profile push to establish the country as a low carbon hub.

The value of clean tech mergers and acquisitions witnessed a marginal increase in value rising from $80.1bn in 2008 to $86.5bn in 2009, despite a 24 per cent reduction in the number of deals to 2,176.

According to the report, titled Clean Technology Annual Deals Analysis 2010, clean technology investments in Asia Pacific and Europe increased by 126 per cent and 52 per cent respectively in 2009 with Europe reporting investments of $168.4bn in 2009 compared to $110.5bn in 2008.

Meanwhile, North America appeared to be hit harder by the economic downturn and delivered a more modest performance with the value of clean tech investments edging up from $141bn in 2008 to $145bn in 2009.

Arun Kumar C, an analyst at GlobalData, said the global credit crunch had made small and medium sized green businesses prime targets for mergers and acquisitions. "Small and medium sized clean tech companies struggled to stay afloat during 2009 due to tight financing options caused by credit crunch," he said. "Government owned power utilities in an effort to diversify the energy mix acquired clean energy companies the world over which also bumped up M&A Investments."

However, while overall investments defied the downturn, venture capital f inancing for clean technology companies slumped dramatically from $8.8bn in 2008 to $3.4bn in 2009. The number of venture capital deals also decreased from 373 deals in 2008 to 236 deals in 2009, as venture capitalists shied away from investing in potentially risky start ups.

In addition, private equity financing decreased drastically from $19bn in 2008 to just $3.6bn in 2009, again mirroring the global financial meltdown. The Quercus Trust topped the PE financing table, by participating in 10 transactions for deal value worth $44.3m in 2009.

However, the collapse in venture capital and private equity investment was offset by the growth in other forms off deals.

Debt offerings, including secondary offerings and private placements, became the most prominent form of financing activity in the clean technology market with over $221bn raised from 550 deals in 2009, compared to $127bn raised from 474 deals in 2008.The energy generation segment contributed of 51 per cent to the total deal value in 2009, while public debt offering dominated the debt market with 460 deals worth $165bn.

At the same time, equity offerings including initial public offerings (IPOs), secondary offerings, and private placements, increased from $45bn in 2008 to $64bn in 2009. One of the major deals that caught the headlines was Enel's completion of rights offering for $10bn.

Arun Kumar C, at GlobalData said: "Global stock markets plummeted and investor confidence in equities remained at very low levels throughout 2009. Corporations naturally opted for low-risk debt instruments to finance their operations and expansions which manifested as a marked increase in debt offerings."