* Enphase and Luca Technologies expected to trade on Friday
* IPO interest in clean technology picking up after drought
* Skepticism still remains about viability of sector
By Olivia Oran
March 29 Two U.S. clean tech companies plan to
go public on Friday, as executives and bankers increasingly bet
that high energy prices and more proven technology will make
investors forget the sector's recent flameouts.
Solar inverter company Enphase Energy priced shares
at the low end of its range on Thursday night, while selling
more shares than expected. Clean fuel company Luca Technologies
is expected to price shares later in the day.
Those offerings could pave the way for other, similar IPOs
in coming months, analysts said.
The sector is still reeling after the large-scale
bankruptcies last year of solar-panel maker Solyndra and energy
storage company Beacon Power. Shares of other clean
tech companies have performed poorly since their listing. In
addition, the sluggish economic recovery is dampening enthusiasm
for emerging industries.
Yet, investor appetite is slowly coming back in the sector,
thanks in large part to a new crop of companies based on clean
technologies, from biofuels to solar, that have matured much
more than their predecessors.
Relatively high oil prices - $4 a gallon gas - and concerns
about supply disruptions also are helping create an opening
where numerous deals are expected to be launched this year.
"There's a push going on and a window right now for IPOs
that we haven't seen in 18 months," said Ben Kallo, a clean tech
equity analyst at Baird.
Adds Jay Spencer, Ernst & Young LLP's Americas Cleantech
director: "We've been talking about clean tech for years, but
now there are products out there so people are finally starting
to use them and experience them."
But this time around, investors are becoming more careful
and looking for companies with proven technology and solid
business plans, rather than those breaking into markets so
nascent they barely exist today.
"In the past, certain companies have gone public with
technology that was only proven in a lab or at lab scale, but
now investors are more discerning and are looking for young
companies that have proven their technology at least near
commercial scale," said Jim Schaefer, global head of renewable
energy and clean tech and Americas head of power & utilities at
"Investors say: 'I don't want to hear about a unicorn - I
want to see a unicorn.'"
VENTURE CAPITAL INFLOWS
Last year, there were 54 clean tech IPOs globally, which
raised a total of $9.6 billion, according to clean tech research
firm Kachan & Co.
That was down from 98 IPOs, which raised $16.4 billion in
the prior year. The majority of these offerings both years,
however, were from China, where companies are looking to improve
energy efficiency and reduce greenhouse gases in a country that
is considered to be the world's largest polluter.
However, more venture capital money has been flowing into
the sector. Global clean tech investment from venture capital
topped $9.1 billion in 2011, up from $8.2 billion in the year
prior, according to industry research firm the Cleantech Group,
which tracks clean tech investment.
"It's all about having a critical mass of these companies
make it through the pipeline to the point where they make sense
to the public markets," said Andy Garman, a managing director
with New Venture Partners who focuses on energy and
environmental technologies. "The next wave of clean tech might
have more technologies that look like traditional IT companies."
The upcoming IPOs will further test the waters of an already
"Some investors are saying 'why do I want to invest in a
market where I've already been burned?'" said one banker who
works with clean tech companies. "For some of these companies,
it's going to be a tough sell."
Clean tech skeptics have long pointed to the sector's
overdependence on government subsidies and massive amounts of
capital for technologies to become functional.
PayPal founder and Facebook investor Peter Thiel is
one outspoken critic of today's clean technology companies.
"Clean tech is an increasingly large disaster that people in
Silicon Valley aren't even talking about any more," Thiel said
last year during the TechCrunch Disrupt conference in San
Netscape co-founder Marc Andreessen has also publicly said
that his venture firm Andreessen Horowitz will not look at the
clean tech sector as it requires a different skill set than
investing in IT companies.
Enphase, based in Petaluma, California, priced its shares at
$6 a piece, at the low end of its range. It sold 9 million
shares in the offering, above the 7.3 million shares it expected
Enphase was forced to slash its range earlier this week to
between $6 and $7 a share from $10 to $12 apiece. The company's
products convert solar-generated electricity to standard AC
Luca Technologies, based in Golden, Colorado, has not cut
price expectations. It is looking to raise about $100 million by
selling 8.5 million shares at a range of $11 to $13 a share. The
company's products help draw more useable methane from
hydrocarbon deposits in the earth.
Both trash-to-bio fuel company Enerkem and solar thermal
company BrightSource Energy also set the terms for
their public debuts last week, seeking to raise as much as
$137.8 million and $182.5 million, respectively.
Additional IPOs this year are likely to come from a range of
industries including smart-grid network providers, LED lighting
companies and energy-efficient material makers, say bankers and
Biofuel companies will also continue to tap the public
markets on high oil prices, and as people look for alternative
On Thursday, President Obama addressed the concerns many
Americans are facing with rising gasoline prices, calling on
Congress to repeal tax breaks for big oil firms.
Investors are hopeful that a crop of new biofuel IPOs will
perform better than past offerings did. Biofuels companies Gevo
, KioR and Solazyme, which went public
last year - and all of which were unprofitable at the time of
their offerings - traded below their IPO prices on Thursday.
Yet, despite this weak performance, interest in clean tech
remains strong among some investors, who see the sector maturing
from its early days in 2007 with more established companies.
"It's been a challenging space broadly since mid-2011 but
there are certain investors who want to play in clean tech still
and have the risk profile to do it," said Terry Schallich, head
of equity capital markets for Pacific Crest Securities who works
with clean tech companies.
"They're perhaps risk adjusting a bit more but there's still
a high level of interest."