Warburg Pincus Leads $220 Million Round for Solar Lender Mosaic
05 August 2016 - 8:10AM
Dow Jones News
Private-equity firm Warburg Pincus is leading a $220 million
equity investment in energy-financing startup Solar Mosaic Inc.,
according to two people familiar with the situation.
The company, known as Mosaic, provides loans for solar
installations for homeowners. It is starting to finance other
energy-efficiency upgrades that are meant to reduce utility
bills.
Mosaic is operating in the same sphere as SolarCity Corp., which
Tesla Motors Inc. is acquiring for about $2.6 billion.
Warburg Pincus will have a slight majority control of Mosaic
through its $200 million investment, one person said. Other
investors in the round include financial technology venture firm
Core Innovation Capital and Obvious Ventures, a firm, co-founded by
Ev Williams, that seeks to invest in startups that offer a positive
social impact. Andrew Beebe, managing director at Obvious Ventures,
has had a long career in solar energy.
In the energy sector, Warburg Pincus has invested primarily in
oil and gas companies. But it did back a solar-panel manufacturer,
Suniva Corp., in 2009.
Oakland, Calif.-based Mosaic had started out by crowdfunding
commercial solar projects. But it later pivoted to raising
institutional funding for portfolios of residential solar
lending.
Mosaic has said that it plans to originate about $1 billion in
residential-solar loans in the coming 12 months. It secured $200
million in credit from DZ Bank as the lead lender earlier this
year. NY Green Bank also participated.
The company's business model is built around allowing people to
own their own solar systems. That contrasts against the predominant
model of financing residential solar under lease programs in which
homeowners rent the solar power their properties generate.
More homeowners are choosing to take out loans to pay for solar
panels, rather than leasing them. Among the advantages of loans is
that the borrower owns the solar panel at the end of the loan.
Loans to own rather than lease likely will dominate the residential
solar market in three to four years, according to
PricewaterhouseCoopers.
Mosaic partners with solar-installation contractors who offer
its loans as an option to homeowners interested in getting solar or
other energy upgrades. It says it has developed a quick
credit-assessment formula, taking a page from the playbook of
online-lending startups.
Other publicly traded financing companies for solar include
Vivint Solar Inc. and Sunrun Inc.
Privately held GreenSky LLC and Spruce Finance Inc., backed by
Kleiner Perkins Caufield & Byers, also operate in the
category.
The company's average loan is about $30,000, a much larger loan
size than for consumer lenders such as Prosper Marketplace Inc. or
LendingClub Corp.
Earlier Mosaic investors include Spring Ventures, Serious
Change, Blue Haven Initiative and Bronze Investments.
Write to Yuliya Chernova at yuliya.chernova@wsj.com
(END) Dow Jones Newswires
August 04, 2016 17:55 ET (21:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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