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Investment Opportunities in the LED Industry : Integration of LEDs with Smart Applications will Invite Major Investments

  • March 2015
  • 53 pages
  • Frost & Sullivan
Report ID: 2789810

Summary

Table of Contents

Key Findings

Residential applications will dominate the market throughout the next decade.
Merger and acquisition (M&A) prospects are likely even as technology becomes a differentiator.
Shorter payback periods and supportive legislation are attracting investors.
Dominance of competing technologies and high initial investment costs are deterrents to the industry.
Investor focus is on next-generation devices that will integrate smart applications with LEDs to increase energy efficiency.

Who Will Benefit?

•Energy management service providers
•Energy-efficient lighting solution companies
•Private equity investors
•Venture capital investors
•Fund managers
•Retail investors
•Sovereign wealth funds
•Hedge funds
•Insurance funds and other members in the investing community

Consistency of Charts

While all efforts have been made to ensure that data is presented for the entire study period of 2008 to 2024, the focus has been on analyzing trends and understanding the key strategies for each sector. Keeping this in mind, time periods for charts may vary. Also, the analysis includes energy efficiency companies with revenue of at least $ x million.

Key Terms

•Growth Capital/Private Equity (PE): A private placement investment made in a mature or middle-market-stage company with the intent of enhancing its growth.
•Venture Capital (VC): Private placement investments in an incubation or start-up firm made with the intent of growing the business rapidly and deriving short-term returns.
•M&As: An aspect of corporate strategy, corporate finance, and management by which corporations legally unify ownership of assets formerly subject to separate controls.
•LED: Light-emitting diode
•CFL: Compact fluorescent lamp
•SSL: Solid state lighting
•ESCO: Energy service providing company
•R&D: Research and development

LED Industry Introduction

•LEDs have huge potential in the global lighting market.
•Outdoor and architectural applications are dominated by direct sales through tendering processes. The residential segment is dominated by retailers, while wholesalers dominate the professional lighting market (office, hospitality, retail, and industrial).
•Strategic involvement in government-initiated technical and market projects gives companies better brand visibility and recall among customers, architects, and installers.
•Smart lighting systems, light management systems, and color control of LED light that can affect end-user mood, are taking the market into a new dimension. In this context, it is essential to understand different investment opportunities in the LED industry and to analyze the dynamics of funding options.
•Leasing and maintenance of lighting solutions, and financing projects, will help companies overcome end-user reservations about the high initial investment required.
•Fragmentation of the LED industry implies that M&As are likely, which makes it imperative to understand M&A drivers.

LED Industry Analysis

Capital costs for installing energy-efficient designs are high.
Financing and maintenance of energy-efficient LED solutions will be key competitive factors.
Holistic, end-to-end solution providers are likely to win major projects.
Brand visibility, pricing, and product warranty are decisive factors in the mass consumer market.
There is a need for greater R&D support from larger companies that would rather invest in expanding their customer base.
Residential energy audits are rare, and customers often do not understand the energy savings from adoption of LEDs.
Strong ties with channel partners, architects, and electrical vendors will go a long way in promoting the LED industry.

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