Saturday, December 1, 2012

Elon Musk’s SolarCity Plans IPO, Supported by Solar Slump

SolarCity Corp., the developer of rooftop solar-power systems whose chairman is Elon Musk, filed to raise more than $200 million in an initial public offering that shows there are areas within the renewable-energy industry that benefit from cheap panels.

The $201.3 million the company filed to raise is a placeholder amount used to calculate fees and may change, according to a regulatory filing yesterday. SolarCity plans to list on the Nasdaq Stock Market under the symbol SCTY.

The company is seeking to go public at a time when shares in publicly traded solar companies have slumped and prices for panels are plunging. SolarCity may do better because its business model depends on buying and installing power-generating systems instead of manufacturing them, according to Aaron Chew, an analyst at Maxim Group in New York

“This is the first real interesting downstream business model, and it has a chance to prove that solar is economically viable if you’re in the right place in the value chain,” Chew said in an interview.

The Bloomberg Global Large Solar Index (BISOLAR) of 17 companies declined 36 percent in 2012 as a global oversupply pushed down prices for panels 28 percent.

Falling panel prices will be an advantage for SolarCity, Anthony Kim, a solar analyst at Bloomberg New Energy Finance in New York, said in an e-mail.

“This may be a pretty game-changing moment for the solar industry,” he said. “We can finally see how plummeting component costs benefit a company operating on the downstream side of the solar business.”
Unprofitable Company

SolarCity reported total revenue of $59.6 million in 2011, an 84 percent increase from a year earlier, and has posted at least five consecutive annual losses, the filing shows.

The IPO may value SolarCity at more than $1.5 billion, a person with knowledge of the matter said earlier this year.

Musk, also chairman of Tesla Motors Inc. (TSLA), the startup electric-carmaker that received $465 million in U.S. Energy Department loans, holds almost one-third of SolarCity’s shares, according to the filing. The company sells power to customers in 14 states, including Wal-Mart Stores Inc. (WMT) and Intel Corp., and plans to expand internationally, the filing shows.

The company was founded in 2006 by brothers Lyndon Rive, the company’s chief executive officer, and Peter Rive, chief operations and technology officer, Musk’s cousins.

Goldman Sachs Group Inc. (GS), Credit Suisse Group AG and Bank of America Corp. are leading the offering,


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