2.15.2011

Clean and Renewable Energy IPOs

Renewable Energy IPOs

With Renewable Energy Investments Increasing 21% Last Year... Is this the Year to Earn Income from Clean Energy Investments?

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The Renewable IPO, Part 1: the Good, Bad and Ugly

By Greg Pfahl, CPA | February 12, 2011 |

A two-part article on how renewable energy companies are benefiting from public offerings. Part 1: A look at the market.

2010 proved to be a much better year for the initial public offering and renewable energy companies, perhaps surprisingly, saw their share of activity. In 2010 there were more than double the number of initial public offerings than in 2009, and we also saw a significant increase in secondary offerings as well.

Worldwide public investment in renewable energy increased 21 percent last year, with China representing 20 percent of the 2010 market, according to VB/Research of London. The REW 40 Index is up 15 percent over the past year at this writing. While it's hard to predict if 2011 will be a frothy IPO market for renewable companies, it is clear the public's appetite for risk in renewables is growing. Despite what you may hear about the effect of lower natural gas prices on renewables, I believe that it is public market performance and availability of willing investors, not commodity prices, that drives the IPO market.

The renewable IPO field saw a series of fits and starts in 2010. The fits — Solyndra, PetroAlgae, Trony Solar — withdrew or reduced their IPOs. But there were some starts as well. Even though Codexis didn't raise the $100 million it had hoped for last April, it still pocketed $78 million from public investors with its IPO. And Amyris is trading at the $30 level, nearly double the IPO of $17.20.

Codexis and Amyris both had successful IPOs even though they are money-losing early stage companies because they have proven technology and real revenues and contracts, with potential high-revenue products in the pipeline. Revenues were $101.5 million last year. The company develops custom enzymes and catalysts for industrial chemical production and has a project going with Shell, a major investor, to speed up production of biofuels from nonfood sources.

Amyris had revenues of $68.5 million for its synthetic biofuels technology. Article Continues Click Here