A massive selloff of stocks back in August raised the possibility of a rapidly closing IPO window for cleantech companies (and most tech companies). And if you were hoping for more uplifting prognosis since then, well, then you’re tough out of luck. It looks like the IPO window will remain jammed closed for the rest of the year.
“You have incredible uncertainty and volatility in the public markets. The window is effectively closed except for the most exceptional companies that are clear leaders in their fields and really want to push through some headwinds to go public,” said Sheeraz Haji, CEO of Cleantech Group, during a conference call to discuss third-quarter venture investment numbers last week. “The performances of IPOs have been poor.”
The global market saw 14 cleantech-themed IPOs during the third quarter of 2011 that raised $1.7 billion, and 11 of them took place in China. The number showed two more IPOs than the previous quarter, but the total amount raised plummeted 23 percent. Share prices had dived as much 56 percent for all but one of the 14 companies, Cleantech Group said.
China may remain a more fertile land for IPOs, but it has problems. In fact, the government is now struggling to prop up its stock markets; a division of China’s sovereign wealth fund began buying shares of the country’s large banks on Monday.
At the Renewable Energy Finance Forum in San Francisco earlier this month, investment bankers also gave a downbeat view. The still-struggling economy and budget fights at the federal government are two big factors. Solar remains one of the top draws for venture capital investors, but the sector has fared poorly this year. It hasn’t helped that many public solar companies missed their guidance and posted declining profits or even losses earlier this year, and their market capitalizations fell off dramatically between March and September, said Amy Corinne Smith, head of global cleantech investment banking at Jefferies & Co.
“Solar is probably one of the most challenging subsectors right now. We are in an unfortunate situation right now where there isn’t a lot of visibility,” Smith said.
Tech IPO filings overall have slowed down, though there was a surge last month. The first two weeks of September saw 11 IPOs (cleantech and non-cleantech), while the second half of the month saw six, including four from cleantech companies, according to Renaissance Capital. That brought the total of pending cleantech IPOs to 13, Renaissance Capital said.
Several of them are biofuel companies that have managed to push out their public debuts (three of them have been from companies backed by Khosla Ventures). While the biofuel IPOs made money for investors, their stocks haven’t performed well. Share prices for some of these companies, such as Gevo and Solazyme, have fallen by half or more since their IPOs.
The four cleantech companies that filed S-1’s in September were from biofuel producers Fulcrum BioEnergy and Mascoma, green chemical maker Elevance Renewable, and bioplastic product manufacturer Trellis Earth Products. None has made a profit.
Other pending cleantech IPOs that could continue to be delayed include green chemical developer Genomatica, solar equipment developer Enphase Energy, smart grid tech company Silver Spring Networks, biodiesel producer Renewable Energy Group, and solar power plant developer BrightSource Energy.
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