Stuart Bernstein, the head of the clean energy group at investment bank Goldman Sachs, has a message for startups and investors: hang in there, things are looking up, he said at the Cleantech Forum in San Francisco Wednesday.
Bernstein recalled the difficulties of doing an IPO last summer when uncertainties about the economy grew as the U.S. credit rating took a dive and the sovereign crisis gripped Europe. But two companies, Renewable Energy Group and Ceres, went public this year, and that bodes well for other IPO candidates, he said. Renewable Energy Group makes biofuel while Ceres sells seeds for growing crops for biofuel feedstock.
“It’s hard to know whether we are half way up the contraction or above the line, but we are certainly in the recovery period,” he said.
Rising oil price in recent months has helped to make investors consider cleantech IPOs, at least those in the biofuel business. But cheap natural gas continues to temper interest in solar and wind companies, Bernstein said. Natural gas proponents have cleverly positioned this energy source as cleaner than coal and oil and cheaper and more readily available than wind and solar.
In recent weeks a variety of greentech IPO hopefuls have make progress toward planned IPOs. Solar electronic maker Enphase Energy, biofuel producer Enerkem and solar power plant developer BrightSource Energy all recently set the price range for their shares. On Wednesday, Enphase lowered the expected price range to $6 to $7 per share from $10 to $12 per share.
A lot of cleantech companies have — or tried — to go public in the past two years. Some of them have generated little (or no) revenues but turned to the public markets to try to raise money. Bernstein said those companies “are circling and waiting to land on the aircraft carrier, and they are nervous because their fuel is running out. We said not yet, not yet.”
Goldman, by the way, advised Solyndra, which tried to go public but abandoned that plan in mid 2010 when it couldn’t drum up enough interest. That was a little over a year before the solar panel maker filed for bankruptcy.
Bernstein drew a parallel between the cleantech sector and the general tech industry during his talk. By throwing up many charts, he pointed out that many tech companies also had trouble attracting enough interest to make their public market debuts during economic downturns in the past two decades. At the same time, some tech companies managed to pull off IPOs in some of these tough times, including eBay, Qualcomm and Netflix, he said. He ended his talk on that positive note.
Photo courtesy of Richard Allaway via Flickr