Here Comes a Cleantech IPO Parade

The list of cleantech start-ups heading for the public markets is rapidly lengthening: Two have recently filed for initial public offerings, and a handful of others are rumored to be contemplating them. On Dec. 28, biofuel start-up Codexisfiled for a $100 million IPO. This came hard on the heels of a $300 million IPO filing by solar-energy start-up Solyndra on Dec. 18. Tesla Motors, the sexy electric-car company, is likewise rumored to be heading for an IPO, and smart-grid integrated-technology maker Silver Spring Networks is also said to be in the chute for a public debut. (Silver Spring has denied these rumors).%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%% According to the Cleantech Group, 29 green technology IPOs have occurred globally in 2009 including, most notably, the recent public offering of battery maker A123 Systems (AONE). The IPO raised nearly $400 million for the Watertown, Mass., company.

The Codexis filing was surprising, as VentureBeat noted, because the biofuel sector has been out of favor among venture capitalists due to some huge flameouts and problems with the ethanol start-ups that dominated the market early. But unlike many biofuel firms, Codexis is actually shipping products and booking revenues.

According to the company's S1 filing with the SEC, losses for Codexis are shrinking, a good sign for potential shareholders. Also, unlike earlier biofuel start-ups, Codexis has built product lines in higher-margin areas such as industrial chemicals and pharmaceutical compounds -- businesses in which profit margins can be many times greater than those derived from wildly fluctuating commodity transportation fuel markets.

Solar IPOs Still Dominate

Big losses haven't scared investors away from cleantech in either the public or private realms. Solyndra has already raised $600 million in venture capital, though it recorded losses in excess of $200 million last year and will likely lose nearly $150 million this year. A123 has yet to achieve profitability and is in an increasingly competitive market to provide high-power lithium-ion batteries to automakers and other manufacturers.

While Codexis does break the mold, the IPO queue has been and likely will continue to be dominated by solar plays for the foreseeable future. That's largely because the path to solar public offerings is well trod, and investors feel quite comfortable with various flavors of the solar panel, a technology that has been a viable commercial offering for decades. Specialized Technology Resources (STRI), which makes key solar cell material components, went public in November; and Chinese solar cell maker Trony Solar, has filed for an IPO that should take place shortly, as Sustainable Business reports.

However, a number of multibillion dollar cleantech private-equity funds have recently closed, implying that increased activity is imminent for PE funds that demand liquidity on a tight schedule to appease their limited partners. With more federal stimulus checks for greentech initiatives hitting corporate mailboxes and government accounts this year, the public-equity markets are growing more bullish on the segment, which is expected to remain an ongoing beneficiary of Uncle Sam's largesse.

That said, no one sees any Google-esque, multibillion-dollar IPOs emerging from greentech anytime soon. But a little bit of public activity is far better than none.
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