By Nichola Groom
LOS ANGELES Oct 5 Solar panel installer
SolarCity Corp filed with U.S. regulators to raise up to $201
million in an initial public offering that could help rekindle
investor appetite for cleantech stocks.
Shares of solar panel manufacturers have logged terrible
performances in the last two years as plunging panel prices
erased profits. But those lower prices have spurred demand for
solar systems in the United States, helping companies like San
Mateo, California-based SolarCity.
SolarCity has expanded rapidly thanks to a business model
that allows residential customers to lease solar panels for
their roofs. Rather than paying the large upfront costs required
for a solar installation, customers pay a monthly fee.
Companies including Google Inc and U.S. Bancorp
have provided funds to finance SolarCity's projects.
Those investors are able to collect a 30 percent federal tax
credit for solar energy systems.
Two of those funds are being audited by the Internal Revenue
Service, SolarCity disclosed in its filing on Friday.
SolarCity, the largest U.S. solar installer, faces stiff
competition in the solar lease arena from startups including
SunRun and Sungevity, as well as stalwart solar players such as
SolarCity was founded in 2006 by brothers Lyndon and Peter
Rive along with their cousin, PayPal co-founder and Tesla Motors
Chief Executive Elon Musk. Lyndon Rive is SolarCity's
CEO, Peter Rive is its chief operating officer, and Musk serves
In a filing with the Securities and Exchange Commission,
SolarCity said it had more than 31,600 solar system customers as
of June 30, 2012. That compares with 5,775 on Dec. 31, 2009.
The company's total revenue was $46.6 million in the three
months ended June 30, compared with $13 million a year earlier.
It said it had an accumulated deficit of $70.3 million as of
The company plans to list its common stock on the Nasdaq
under the symbol "SCTY."
IRS AUDIT REVEALED
SolarCity hopes it can buck the lackluster trend among
recent cleantech IPOs. Enphase Energy, a solar inverter
maker that is one of the only green companies to go public this
year, closed at $3.65 on Friday after debuting at $6 in March.
Other cleantech companies, including solar thermal company
BrightSource Energy and clean energy company Luca Technologies,
cancelled IPO plans at the last minute earlier this year.
But SolarCity's backers have pointed out that unlike most
publicly traded solar companies, it operates in the part of the
solar market that is benefitting from the freefall in prices.
Still, analysts said it won't be easy going considering the
weak performance of solar stocks in the last two years.
"Solar investors are very pessimistic, so it's going to be a
tough market to come out in," Avian Securities analyst Mark
SolarCity said it might use a part of the proceeds from the
offering to expand its current business through acquisitions or
investments in other complementary strategic businesses,
products or technologies.
It said, however, that reductions in or eliminations of
government incentives for solar power could hurt its results and
its ability to compete.
In addition, SolarCity said it was notified this month that
the Internal Revenue Service is conducting audits of two of its
investment funds, including a review of the solar installations
that applied for a popular government cash grant program.
"If ... the Internal Revenue Service determines that the
valuations were incorrect and that our investment funds received
U.S. Treasury grants in excess of the amounts to which they were
entitled, we could be subject to tax liabilities, including
interest and penalties, and we could be required to make
indemnity payments to the fund investors," the company said in
the SEC filing.
Goldman Sachs, Credit Suisse Securities and BofA Merrill
Lynch are acting as the lead underwriters for the offering.
The amount of money a company says it plans to raise in its
first IPO filing is used to calculate registration fees. The
final size of the IPO could be different.
SolarCity investors include Draper Fisher Jurvetson, DBL
Investors, Mayfield Fund, Shea Ventures and Valor Equity