Following a successful public debut of one of its companies last year,
The San Francisco-based firm, an early stage investor in many green companies, including battery maker
“What A123 demonstrated is that the IPO market is available to companies that are very highly differentiated,” says Tom Baruch, CMEA managing director.
Green startups that have distinct technology, and have demonstrated that their business model works, have a good chance of attracting investor interest, both in the public and private markets, Baruch says.
With oil prices moving up steadily and the U.S. economy stabilizing, investors and experts are forecasting that 2010 will be marked by some of the more mature green startups testing public enthusiasm for companies that have big growth potential, but little profit. A123, which has yet to report a profit, was CMEA’s first portfolio company to go public in nearly two years.
Fremont, Calif.-based Solyndra, which builds thin-film solar tubes, filed for a $300 million IPO last month. The company’s investors also include
Redwood City, Calif.-based Codexis, which is working with Royal Dutch Shell on biofuel products, filed for an IPO last week. The company has raised more than $125 million in funding from CMEA,
Green energy was a small corner of the IPO market in 2009, and the deals had mixed results.
CMEA’s portfolio company A123, which makes lithium-ion batteries for the automotive market, had a smash-hit debut with shares jumping over 50% in its first day of trading in September. On the other hand, Chinese thin film solar panel maker Trony Solar Holdings Co. Ltd. postponed its IPO indefinitely last month.
Baruch, who honed his early stage investment skills at the Battelle Development Corp. and then at Exxon in the 1970s, said financial markets were looking for “good quality opportunities.”
“For the last two years, investors have had their hands in their pockets,” Baruch says. “With the global economy loosening up somewhat, some of that money is coming off the sidelines.” Baruch, however, does not believe there would be a deal rush this year.
“This is going to go very slowly,” he says.
Worldwide venture capital investment in green technology companies fell 33% in 2009 to $5.6 billion during the global financial turmoil, according to a survey by Cleantech Group and Deloitte.
Green technology venture investment, however, was supported by increasing corporate and utility investment, the group said. Investment in solar in 2009 was down 64% from the previous year, but the sector continued to be the top green technology sector for venture investment in 2009 and accounted for 21%, or $1.2 billion, of total green investment.
Going forward, Baruch says he is bullish about the solar industry.
“The price of energy is moving up and that’s a very, very favorable trend for alternative energy,” Baruch says. —Poornima Gupta, Reuters