* Now expects to sell 11.5 mln shares at $8 each
* Previously planned to sell 10.1 mln shares at $13-$15
* Pricing Wednesday night, trading Thursday – underwriter
By Olivia Oran and Nichola Groom
Dec 12 (Reuters) – SolarCity Corp, the top U.S.
installer of residential solar systems, slashed the expected
price of its initial public offering and said it would sell more
shares a day after an underwriter said the deal had been
postponed.
The move values the Elon Musk-backed startup at $585
million, almost half its earlier proposed valuation of nearly $1
billion.
SolarCity is among Silicon Valley’s hottest clean technology
companies, and its IPO has been widely anticipated in venture
capital and solar energy circles.
The company has grown rapidly, largely because it allows
customers to lease solar panels by paying a monthly fee and
avoiding the hefty costs of an outright purchase. It has also
benefited from a slide in the price of solar panels that has
helped spur dramatic growth in U.S. solar installations.
But a gap between how SolarCity was marketed – as a fast
growing technology firm – and investor perception of the company
as more of a utility or power company play, likely contributed
to price sensitivity, according to a source familiar with the
deal.
While technology companies can often command higher
valuations because of their growth potential, utility companies
are typically regarded as safer investments and trade at lower
multiples.
Investors had said previously that SolarCity’s projected $1
billion valuation was too rich. That value would have made it
the second most valuable U.S.-listed solar company behind panel
manufacturer and project developer First Solar Inc,
which has a market capitalization of $2.6 billion.
Under the new proposed valuation, SolarCity would be valued
closer to SunPower Corp’s $618 million market
capitalization.
SolarCity said on Wednesday it now expects to sell 11.5
million shares at $8 each. It had previously planned to sell
10.1 million shares priced between $13 and $15 each.
The offering is likely to be priced on Wednesday night and
start trading on Thursday on the Nasdaq, an underwriter said.
The company said in a filing that existing stockholders
would also sell about 65,000 shares. ()
The clean technology sector has suffered some recent
high-profile flameouts with the bankruptcies of solar company
Solyndra and battery maker A123 Systems.
Though solar installations are growing dramatically in the
United States, investors are also gun shy after pouring money
into solar manufacturers whose share prices collapsed due to
industry oversupply and a sharp slide in the price of their
products.
“You’ve got the fiscal cliff uncertainty, market uncertainty
and misunderstanding about which part of the solar value chain
is expanding and seeing growth,” said Ron Pernick, founder of
Portland, Oregon-based cleantech research firm Clean Edge.
“Markets are staying pretty steady but I still think there is an
undercurrent around all of the uncertainty. I don’t see how that
would help any company seeking to go public right now.”
SolarCity was promoted as the most promising alternative
energy IPO candidate since the debut of Musk’s electric car
company, Tesla Motors Inc, in 2010.
Technology entrepreneur and PayPal co-founder Musk is
SolarCity’s chairman and the first cousin of its co-founders,
Lyndon and Peter Rive. He currently holds a 31 percent stake in
the company and said he will buy $15 million of SolarCity stock
in the IPO.
SolarCity’s revenue has more than quadrupled in the last
five years.
The San Mateo, California-based company reported a net loss
of $80 million on revenue of $103.4 million for the nine months
ending Sept. 30, 2012.
Google Inc and U.S. Bancorp have helped
finance some SolarCity projects, but investors said that
determining an IPO price was challenging because there are few
publicly traded direct competitors with which to compare it.
Underwriters picked for the IPO include Goldman Sachs,
Credit Suisse, and Bank of America Merrill Lynch.
