Green tech IPOs stronger in 2010 but no deal rush
NEW YORK (Reuters) - Green technology companies could see a little more investor interest in 2010 if rising oil prices encourage energy users to look for alternative sources of fuel.
In a sign of what might be on the horizon, California solar company Solyndra Inc filed for a $300 million IPO on Friday. The company has long been viewed as a potential IPO candidate.
But don't expect a torrent of new green technology IPOs until a revolutionary new technology emerges, which could be years off, analysts said.
Green energy was a small corner of the IPO market in 2009, and the deals had mixed results.
Lithium ion battery company A123 Systems Inc was one of the most successful IPOs of the year, with its shares rising more than 50 percent in their first day of trading in September.
The stock has since given up some of those gains, but is still 47.5 percent above its IPO price.
On the other hand, Chinese thin film solar panel maker Trony Solar Holdings Co Ltd postponed its IPO indefinitely last week.
In other words, investors were choosy when it came to alternative energy IPOs in 2009, but 2010 could be different if oil prices keep rising.
U.S. crude oil prices were below $34 a barrel in February, but are now above $73.
"That's definitely a positive for these IPOs in 2010," said Bill Buhr, an IPO Strategist at research house Morningstar, but he added that he does not expect a huge surge in green tech deals next year.
Green companies' offerings represented a small portion of the overall U.S. IPO market this year. Energy and power-related IPOs -- which include both traditional energy and alternative energy -- ranked fifth by dollars raised in 2009 in the IPO market, according to Thomson Reuters data. They accounted for about 8.5 percent of issuance by companies going public in 2009.
But green energy companies have raised more capital in recent months, from sources including venture capital, private equity, public equity, and debt funds. That could translate to more companies ready to go public in coming years.
According to London-based New Energy Finance, green companies -- from solar and wind power, other renewable energy, electric vehicles and energy storage -- raised just $13.3 billion in the first quarter of 2009, its lowest quarterly amount since early 2006.
But in the third quarter, that figure rose to $25.9 billion, aided by improved public markets and the first flows of green stimulus funds from governments, the research firm reported in October.
Few analysts foresee the green energy market becoming frothy in 2010.
"Emotion is totally gone in the IPO market," said IPOdesktop.com President Francis Gaskins. "Story stocks are not going to make it."
He said investors are focused on a company's numbers and growth potential.
Green technology companies seeking IPOs will need to show alliances with companies that are already public or with well-known backers, said IPO Boutique Senior Managing Partner Scott Sweet.
But there is a passel of relatively mature green technology companies that could raise money in IPOs in coming years, analysts said, citing smart grid networking company Silver Spring Networks; electric car maker Tesla; and pharmaceutical, biofuels and carbon capture company Codexis.
(Reporting by Clare Baldwin in New York, Additional reporting by Laura Isensee in Los Angeles and Poornima Gupta in San Francisco; Editing by Dan Wilchins and Richard Chang)
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