UPDATE 3-SolarCity shares soar 47 pct in market debut

Thu Dec 13, 2012 4:26pm EST

* Share rise comes after difficult pricing process

* Company viewed as bright spot in challenging cleantech sector

* Valuation now stands at around $845 mln (Updates with closing share price, analyst comment, details on stock ownership.)

By Olivia Oran and Nichola Groom

Dec 13 (Reuters) - Shares of SolarCity Corp jumped nearly 50 percent during their market debut on Thursday, a day after the company was forced to slash its IPO price to attract investors skittish about putting money into the volatile clean technology industry.

The solar panel installer's stock rose 47.4 percent to close at $11.79. It hit a session high of $12.70, just 30 cents shy of the low end of the company's original proposed pricing range.

The San Mateo, California-based company backed by technology entrepreneur Elon Musk sold 11.5 million shares at $8, raising $92 million. It initially had planned to sell 10.1 million shares between $13 and $15 per share.

SolarCity, the top U.S. installer of residential solar systems is among Silicon Valley's hottest clean technology companies. Its IPO has been widely anticipated in venture capital and solar energy circles.

The company has grown rapidly, largely because it allows customers to lease solar panels by paying a monthly fee, avoiding the hefty costs of an outright purchase.

Concern that the company's original $1 billion valuation was too rich initially turned off potential investors, many of whom have been burned by the poor performance of cleantech stocks broadly and solar manufacturing stocks in particular, SolarCity Chief Executive Lyndon Rive said in an interview.

"We don't manufacture equipment, we sell cheaper clean energy. I thought that that would be enough to convince investors to look at the fundamentals of the business," Rive said, adding that investors "just cannot take any risk."

SolarCity's valuation now stands at around $845.3 million. At the bottom end of its first expected pricing range, SolarCity would have had a valuation of about $930 million. SolarCity is now the second-most valuable U.S.-listed solar company behind panel manufacturer and project developer First Solar Inc , which has a market capitalization of $2.6 billion.

The clean technology sector has seen its share of disappointments in the last year. In April, solar power company BrightSource withdrew its IPO after receiving backing from top investors including Google Inc. Other high-profile flame-outs included bankruptcies of solar company Solyndra and battery maker A123 Systems.

"I'm glad that it got done," Robert W. Baird analyst Ben Kallo said of SolarCity's IPO. "Even at the discount it got done at, and even with Elon (Musk) and some of the venture backers stepping in and buying shares, it's good for the whole industry."

Musk, co-founder of Tesla Motors and PayPal , is SolarCity's chairman and the first cousin of its co-founders, Lyndon and Peter Rive. According to a U.S. Securities and Exchange Commission filing, Musk will hold a 28.4 percent sake in the company after buying $15 million of SolarCity stock in the IPO. The Rive brothers will each own 5.6 percent stakes following the offering, he filing said.

SolarCity's venture capital backers include Draper Fisher Jurvetson, DBL Investors, Mayfield Fund, Shea Ventures and Valor Equity Partners. Draper Fisher Jurvetson said it would buy 1.5 million shares at the IPO price, and DBL said it would buy 300,000 shares.

SolarCity reported a net loss of $80 million on revenue of $103.4 million for the nine months ending Sept. 30.

Underwriters for the IPO include Goldman Sachs, Credit Suisse and Bank of America Merrill Lynch. (Reporting by Olivia Oran; editing by Gerald E. McCormick, Matthew Lewis and David Gregorio)

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