BAY STREET-Green shoots start to sprout in green sector

* Cleantech financing deals on the rise

* Companies put IPOs on hold during credit crunch

* Investor interest seen returning

* Sector's revival "incredibly fragile"

By Susan Taylor

OTTAWA, June 28 (Reuters) - Canada's alternative energy sector is showing signs of a budding recovery, as companies resurrect financing deals and public offerings that withered with the recession, but that revival remains very fragile.

In recent weeks, companies ranging from water treatment firm GLV Inc (GLVa.TO) to green building products maker Genesis Worldwide Inc (GWI.TO) have raised millions of dollars in share and debenture offerings.

Geothermal firm Magma Energy Corp just raised C$100 million ($87 million) in a warmly received initial public offering and electric car maker Zenn Motor Co Inc (ZNN.V) has filed a preliminary, unpriced prospectus to sell shares.

"It's the first green shoots appearing in the green energy area," said Duncan Stewart, analyst at DSAM Consulting.

"If you compare buying a cleantech stock to a computer, (investors) put it in a sleep mode. Now that they've turned the market back on, the first thing that pops up on their screen is: Note to self - Go buy some cleantech stocks."

The activity marks a thaw from the investment freeze that slammed cleantech firms -- which sell technology that boosts productivity while cutting costs and energy consumption -- particularly hard when the credit crisis took hold.

Two months into 2009, for example, cleantech companies listed on the Toronto Stock Exchange and TSX Venture Exchange had raised just C$4.7 million in financing deals.

That grew to C$125 million by the end of April and then jumped another 22 percent to C$152.6 million at the end of May, according to the latest TSX data.

As of May 31, four such companies had completed public offerings in 2009, bringing sector listings to 117 on the Toronto exchanges.

There are more IPOs and financing deals to come after the sector bottomed out in the first quarter, said John McIlveen, research director at Jacob & Co Securities Inc, an investment bank that specializes in renewable energy.

"Most of the companies, for the past year, have had their stocks so depressed ... no one wanted to even issue shares at that level. There was too much dilution," McIlveen said.