(Reuters) - SunEdison Inc said it would spin off its semiconductor business in an initial public offering and use the proceeds to build solar farms.
Shares of the company, formerly known as MEMC Electronic Materials, jumped 23 percent in morning trade on Thursday, their steepest rise in one year.
SunEdison said it plans to sell a minority stake in the newly formed SunEdison Semiconductor to the public in the offering, which is scheduled for early 2014.
A SunEdison spokeswoman declined to comment on what the IPO might raise, but re-iterated the company’s commitment to its solar business, which designs, installs and maintains solar power plants.
“We’ve been very clear that we see solar as a strong growth opportunity,” said Dawn Brister.
“SunEdison is justified in narrowing its focus to the solar industry given the strong spurt in demand, particularly in terms of installed capacity,” RBC Capital Markets analyst Mahesh Sanganeria said.
Several solar companies, such as SunPower Corp and First Solar Inc, have moved into the higher margin business of developing solar farms as solar panel prices continue to remain weak.
Global installations are expected grow at a double-digit rate to 35 gigawatt (GW) in 2013, according to business information provider IHS.
SunEdison ended the second quarter with a project pipeline of 2.9 GW, up 218 megawatt from the first quarter.
The company, which changed its name from MEMC Electronic Materials in May, reports results under two units: semiconductor materials and solar energy.
The semiconductor materials business, which makes wafers used in chips for computers, mobile phones and cars, accounted for a third of second-quarter revenue of $401 million.
SunEdison earlier this month reported a wider-than-expected quarterly loss and said its semiconductor business would remain weak due to a slump in the wafer market.
A bulk of the company’s revenue comes from its solar energy business,
SunEdison expects to file a registration statement with the Securities and Exchange Commission in the third quarter of 2013, the company said on Thursday.
Reporting by Swetha Gopinath in Bangalore; Editing by Kirti Pandey and Saumyadeb Chakrabarty