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IPO Comeback Starting Now, Cleantech Investors Say

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Cleantech investor Steve Westly, managing partner of The Westly Group and former California state controller, is at it again. In a keynote speech at the Thomson Reuters “Financing the Cleantech Vision” conference in Palo Alto, Calif., on Thursday, Westly said that after a major dry period, initial public offerings in the cleantech space are on their way back. Westly offered us his top cleantech IPO predictions for the first quarter of 2010 — Silver Spring, Solyndra and Tesla (in which Westly has invested) — last month. And now it appears he’s not alone in forecasting an IPO revival.

“I think in the next 12 months, we will see a dozen IPOs, and some will be blockbusters,” he said. Westly pointed to Magma Energy, a Canadian geothermal company that filed a prospectus earlier this month and now says the offering could top C$100 million ($86 million), double some previous estimates. He also said he expects another company in his portfolio –- one he wouldn’t name or give any details about (but that we speculate might be Tesla) -– to go public in that time frame.

Mark Kalpin, a partner in the emerging energy technology group at law firm WilmerHale, also said he “definitely” expects to see more IPOs in the next 12 months. “There were a number that were ready to be prepared before the financial crisis that are holding off,” he said. “I think once we see things turn around, we’re going to see some of those going forward.”

Some of the first offerings will probably be those that were tied to specific projects, especially in cases in which the companies are expected to get stimulus funding to help with those projects, he added. While he didn’t name any specific companies, like Westly previously predicted, Tesla Motors might fit into the category he described. Tesla had been planning an IPO before the downturn and this week won approval for $465 million in low-interest direct loans from the Department of Energy under the delayed Advanced Technology Vehicle Manufacturing Program.

The IPO market is already showing a few signs of life in the second quarter, said Brian Goucher, director of the cleantech practice at Deloitte, who expects to see increasing vitality in subsequent quarters. “A year from now, there are going to be more IPOs,” which will also lead to higher valuations for companies and more acquisitions, he said.