Verengo Solar, a leading residential U.S. solar installer, has retained Bank of America Merrill Lynch to help with its potential sale, according to a document obtained by Greentech Media.
It's another step in the consolidation and transformation of the fast-moving residential solar installation and finance industry.
Armed with equity funding from Angeleno Group and ClearSky Power & Technology Fund, Verengo has grown to be one of the largest residential installer (behind SolarCity and Vivint), with a current market share in the 3 percent to 4 percent range. SolarCity and Vivint Solar installed more than one-third of all residential systems in 2013 and raised more than half of the $2.3 billion in project funds announced last year.
Verengo was founded in 2008 by Randy Bishop and Ken Button and now has more than 1,000 employees. The firm had 2013 revenue of $116 million and deployed 25 megawatts of photovoltaics last year.
The market is moving toward the vertical integration of leaders SolarCity and Vivint, although Verengo, Sunrun, Sungevity, CPF and Solar Universe exist in a hybrid integrated structure made up of complex alliances between specialists.
Recent transactions in this market include SolarCity's $158 million acquisition of racking maker Zep Solar, SolarCity's acquisition of Common Assets, Vivint's $12 million acquisition of Solmetric and Sunrun's acquisition of REC Solar's residential business. There have been scores of other financing events in this market; it's a tax equity funding and solar securitization portfolio that Greentech Media continues to track.
Verengo's growth from 2012 to 2013 was slower than the 61 percent growth rate of the residential market as a whole. Unlike SolarCity or Vivint, Verengo relies on third-party financiers such as Sunrun to finance the solar installations. Sunrun could lose a significant amount of business if a Verengo acquisition moved financing in-house.
From the wild speculation department: Possible acquirers include SunEdison or SunPower, looking to catch-up with the leaders in residential financing. Other folks have speculated about the potential buyer as a utility affiliate that has not yet made a play in distributed solar, such as PSE&G, MidAmerican or Constellation. Other potential acquirers include a private equity firm that believes it can unlock value from the pure-play seller and installer.
Bank of America Merrill Lynch had no comment. Verengo has not responded to inquiries.
GTM Research covers the U.S. downstream solar market with a focus on the residential and commercial markets. For more information on the market leaders, see the GTM Research U.S. PV Leaderboard.