Figure 5: Top Inbound Renewable Energy M&A in 2015 Completed Date Renewable Energy Type Deal Value US$m Target Company Target Dominant Country Bidder Company Bidder Dominant Country Pending Wind 580 Continuum Wind Energy Pte Ltd. India SunEdison Inc. USA Pending Wind 347 Ararat Wind Farm Australia Partners Group; Renewable Energy Systems; General Electric; OPTrust Switzerland 9-May-15 Wind 280 Japan Wind Development Co., Ltd. (79.16% stake) Japan Bain Capital LLC; Masayuki Tsukawaki (Private Investor) USA Pending Solar 156 GD Solar Co., Ltd. (100-MW photovoltaic solar power project) China SPI Solar Power (Suzhou) Co., Ltd. USA Pending Wind 105 Honiton Energy Holdings Plc (Three wind farms in Inner Mongolia) China SunEdison Inc. USA Source: Mergermarket Hydro power While Asia-Pacific is home to several of the world’s largest hydropower projects and natural waterways, acquisitions of hydro assets have been limited. The sector accounted for 15% of deal value in renewables since 2012, not far behind wind power M&A. However, this has translated into only 10% of deals, compared to wind power’s 24% share. These deals have largely involved investment in Chinese hydropower projects, led overwhelmingly by Chinese corporates and financial sponsors. While sparse, opportunities for foreign investors do exist, with investment requirements in hydropower equipment production, construction materials, operational support services, and transmission links creating growing demand for international capital. Foreign investment In June 2015, US-based renewable energy development company SunEdison announced its acquisition of Continuum Wind Energy Limited, a Singapore-based company with assets in India.

The deal put SunEdison in possession of 242MW of wind power plants in India, and 1,170MW of wind power under construction across the subcontinent. The deal was preceded by SunEdison’s purchase of three wind farms in China from Honiton Energy Holdings in May and a planned joint venture with Chinese private equity firm JIC Capital to develop solar assets. Apple Inc. and solar panel maker SunPower are partnering to build two solar power projects in China.

The 40MW project is expected to be completed by the end of 2015. In India, Prime Minister Narendra Modi has pledged to help foreign companies overcome barriers in the market. To secure debt funding, India has proposed a solar bonds program to help foreign investors raise rupee denominated bonds to cut costs. Monetization through YieldCos To monetize their projects, investors are turning to an innovative source of financing: the yield company (yieldco). This structure allows renewable power developers to package select assets currently generating power into companies for public listing.

These growth oriented companies hold operating assets that generate long-term, low-risk cash flow, allowing investors to replenish capital for new project development. Yieldcos have been increasing in popularity in North America and Europe, with several coming to market in the past year. Notably, First Solar and SunPower formed a limited partnership by placing select solar energy generating assets into the yieldco 8point3 Energy Partners LP. Proceeds from the listing will go toward general corporate purposes, including making acquisitions to expand existing renewable energy portfolios. SunEdison’s TerraForm yieldco, launched in July 2014 and focused largely on the US market, raised US$436m in its initial public offering, capital designated to pay off debt and further expand its portfolio of renewable assets.

Its newly minted Terraform Global yieldco will focus on emerging markets and filed for an IPO of Class A common shares in May. Even as international interest has grown in recent years, barriers in these emerging markets still remain high for foreign investors. While China encourages foreign capital in renewable energy equipment manufacturing, these investors are still limited to minority stakes in other major projects. Restrictions are being lifted as the Chinese government opens new sectors in clean energy for foreign investment. Jeffrey Wilson Director JWilson@HL.com +852.3551.2320 HL.com David Richardson Director, Avista Advisory David@avistaadvisory.com +65.6303.0421 Matthew Mazzucchi Co-head, Energy Group MMazzucchi@HL.com +1.214.220.8494 Naveet McMahon Publisher, Mergermarket naveet.mcmahon@mergermarket.com +852.2158.9750 Houlihan Lokey is a trade name for Houlihan Lokey, Inc. and its subsidiaries and affiliates, which include: United States: Houlihan Lokey Capital, Inc., a SEC-registered broker-dealer and member of FINRA (www.finra.org) and SIPC (www.sipc.org) (investment banking services); Houlihan Lokey Financial Advisors, Inc.

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