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Palihapitiya’s Social Capital Leads $375 Million Palmetto Round

(Bloomberg) —

Palmetto Clean Technology, a home solar and energy company, raised about $375 million in a funding round led by Chamath Palihapitiya’s Social Capital.

Social Capital invested about $220 million in the round, which closed last year. That’s the firm’s biggest single investment, Palihapitiya said in an interview Thursday. The fundraising values Palmetto at more than $1 billion, according to people familiar with the transaction, who asked not to be identified as the details aren’t public.

The potential energy crisis brought on by Russia’s invasion of Ukraine underscores a need for energy independence, the former Facebook executive said.

“If you look at what’s happening even just yesterday — Russia attacks Ukraine, Germany suspends the certification of Nord Stream 2, WTI and crude spike above $100 a barrel, it looks like there may be a natural-gas crisis in Germany and all of continental Europe,” Palihapitiya said, referring to a surge in oil prices Thursday that later cooled off. “What you realize is that energy independence is one of these critical national security issues.”

Chamath Palihapitiya, founder and chief executive officer of Social Capital LP, speaks during the Bloomberg Business of Equality conference in New York, U.S., on Tuesday, May 8, 2018. The conference brings together business, academic and political leaders as well as nonprofits and activists to discuss the future of equality, how we get there and what is at stake for the economy and society at-large.

Trends including decarbonization and environmental, social and governance — or ESG — investing have spurred deals for clean-tech companies in recent years. They’ve also led to a rise in such companies merging with blank-check firms.

Rooftop solar is a surging sector in the U.S., but only about 4% of homes in the country feature panels — a far lower percentage than the 20% in Australia, for example, where systems can be bought for a much lower cost. Another key reason for the low penetration: it’s typically a lengthy process to design, sell, permit and connect projects.

Palmetto is among the firms focused on simplifying that process. It uses technology to identify potential customers, manages the product beyond construction, and works with local installers, said Chris Kemper, Palmetto’s chief executive officer.

“We’re aiming to build a home-energy company,” he said in an interview. “In the longer term, we aim to become a much more global utility to the consumer, but we understand in full that we’re using this mechanism of solar to step into that bigger picture.”

Palmetto has previously attracted attention from special purpose acquisition companies, or SPACs. In an early 2021 interview, Kemper said the company got “a call from a SPAC about every 48 hours.”

Now, it’s planning for another funding round. Palmetto is looking at private equity and so-called crossover investors, Kemper said.

Palihapitiya has invested in clean tech-related transactions before. Social Capital was an investor in the equity placement of India-based clean-energy giant ReNew Power when it went public via a blank-check company. He also invested in the equity placement when Sunlight Financial merged with a SPAC backed by private equity giant Apollo Global Management Inc.

Palmetto has about a 60% gross margin and is expected to post positive earnings before interest, taxes, depreciation and amortization this year, Palihapitiya said.

If Palmetto continues to grow at its existing rate, “this will be a monster IPO some time soon-ish,” he said, without providing additional detail on the potential size or timing.

© 2022 Bloomberg L.P.


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