Here’s a trivia question for solar aficionados: Which investor in the sector earned the biggest returns from an IPO in the last six months?
The first clue: It’s not a blue-chip venture capital firm. Second clue: It’s someone you’d associate more with big box stores and bargain shopping than with leading the renewable energy revolution.
Surprisingly, the estate of John T. Walton, heir to the Wal-Mart fortune, beat out the competition by a wide margin last year with the returns it generated from the market debut of First Solar.
First of many?
Shares of Phoenix, Ariz.-based First Solar have more than doubled in price since the company went public on Nasdaq in November, garnering the maker of solar electric power modules a market capitalization of $4.5 billion. The Walton estate owned 81% of the company at the time of its IPO.
While few can boast Walton-scale returns, investors in a broad range of solar ventures have profited handsomely of late from the public market’s receptiveness to renewable energy plays. For the past two years, solar IPOs have enjoyed a sunny reception, with offering volume picking up considerably in the past half-year. Changzhou, China-based Trina Solar, which debuted on the New York Stock Exchange in December, has seen its share price rise from $20 to more than $50. JA Solar Holdings, another Chinese solar company went public in February and is up some since its debut, with a market capitalization of more than $500 million.
The road more traveled
Acquisitions have provided another exit path. SunPower, a venture-backed solar cell startup-turned-$3-billion-public-company, orchestrated one of the largest such deals in November, paying $333 million in cash and stock for PowerLight, a solar system installer backed by private equity investor Remaco Merger AG of Basel, Switzerland. Public companies are also getting acquired, as evidenced by Applied Materials $464 million purchase last year of thin film solar manufacturing equipment maker Applied Films.
But hot sectors have a history of suddenly turning south. And not all solar stocks have proven winners. Post-IPO performance has been disappointing for venture-backed Canadian Solar, a manufacturer of solar products that is actually headquartered in China. Shares shed about a third their value since the money-losing company, backed by JAFCO Asia Technology Fund and HSBC Asian Ventures Fund, went public in November. Shares of Evergreen Solar, a former venture portfolio company that went public in 2000, have slid by a similar amount over the past year.
Meanwhile, few new offerings are waiting in the wings. Cambridge, Ontario-based PhotoWatt International, which designs and sells silicon solar modules, is seeking to raise up to $213 million in an IPO later this year. The company initially filed for the offering in September. —Joanna Glasner