initial public offerings (IPOs) trading on American exchanges

Wednesday, January 8, 2014

Clean tech companies poised for 2014 IPOs

SolarCity (SCTY) shares hit a record high earlier this week after Goldman Sachs upgraded the stock to buy, making it easy to forget the solar-panel installer’s rocky road to market just over a year ago.

SolarCity’s debut in December 2012 was ultimately successful, with its shares surging nearly 50% on the first day of trading, but that was only after a price cut to $8 a share. The stock has since rocketed 700%, prompting calls from investors for the clean-technologies sector to throw open the IPO floodgate.

Despite the clamor, though, it could be slim pickings in 2014.

SolarCity’s IPO “has not unleashed the flood of clean-tech IPOs that market participants expected in 2013,” said Kathy Smith, a principal with Renaissance Capital. In fact, she said there are “very few” such offerings in Renaissance’s 2014 pipeline.

Sahir Surmeli, an attorney who co-chairs the energy technology practice at Mintz Levin, is more optimistic. Energy-technology companies are becoming more integrated into the conventional energy infrastructure, for which, he said, he sees a “strong year” in IPOs.

The companies are growing their revenues and prospects, and their business models are becoming more real for investors, whereas, just three or four years ago, such firms were sold as representing “the future” rather than the present, he said.

If the global economy continues to improve at a reasonable pace, there will be enough stability in the markets to open the doors for more public offerings, he added.

Biofuel makers are the likely exception. These could have a hard time drumming up interest, since there’s already a fair number of public companies available for investors — and their gains have lagged the rest of the sector.

That said, here are the companies industry analysts believe are most likely to go public this year:

Opower Inc., which runs energy-efficiency programs for utilities, is in the home stretch, having hired Morgan Stanley and Goldman Sachs to lead its public offering.

The Arlington, Va.–based company has been preparing its IPO since at least last year and recently added some key people to its board of directors. A market debut is expected in early 2014.

Opower serves more than 90 utilities, including eight of the 10 largest in the U.S., according to its website. Daniel Yates and Alex Laskey founded the company and serve as CEO and president, respectively.

Sunrun Inc., headquartered in San Francisco, is a solar-power installer, and its business model is power-purchase agreements, where users pay for the electricity and lease their PV panels rather than buying them.

In June, Sunrun announced it had secured financing for more than $630 million in residential solar projects. Its main competitors are SolarCity and SunPower Corp. SPWR -0.33%  . Edward Fenster and Lynn Jurich co-founded Sunrun and are the company’s co-CEOs.

Bloom Energy of Sunnyvale, Calif., makes solid oxide fuel cells around which it builds on-site power-generation systems. Its star-studded customer list includes Wal-mart, Google and AT&T, and the firm in August started a leasing program with Bank of America Merrill Lynch (terms weren’t disclosed). K.R. Sridhar, with a background in aerospace, is co-founder and CEO of Bloom.

In the past couple of years, several clean-energy companies have filed and then withdrawn IPO applications. Any of them could, however, toss their hats back in the ring this year.

Clean-energy and related companies that shelved IPO plans in the past include biofuel makers CosKata Inc. of Illinois, which halted its IPO process twice; Fulcrum Bioenergy of California; and Smith Electric Corp. of Massachusetts, a maker of commercial electric trucks and buses.

The Class of 2013, besides SolarCity, included BioAmber Inc. BIOA +0.12%  , a renewable chemicals company that debuted in May and also reduced its initial pricing range, and smart-grid company Silver Springs Networks Inc. SSNI +6.32%  , which went public in March at $17 a share, in the middle of its anticipated price range.

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