Alternative energy IPOs have appeal, with solar topping list
NEW YORK -- Investors' appetites for new alternative energy companies remain robust but tastes have shifted: while ethanol makers seem to have exhausted their favor, Chinese solar cell makers continue to pull in fresh capital.
According to IPOHome.com, 115 companies went public in the United States during the first half of the year. Of those, eight were in the alternative energy sector, compared with nine offerings for all of 2006.
"What we're seeing is a very strong pipeline" of renewable energy IPOs, both in the United States and overseas, said Michael Liebreich, chairman and chief executive of research provider New Energy Finance.
That's particularly true for solar and wind companies, he said. On the other hand, after a banner 2006 that saw three ethanol companies raise just shy of $1 billion in initial public offerings, ethanol IPOs have ground to a halt as concerns about high raw material costs and saturation curbed market demand.
BioFuel Energy Corp. has been the only ethanol company to go public in the United States this year and still it struggled to sell shares to investors. The company slashed its IPO price to $10.50 from a range of $16 to $18 per share and reduced the number of shares offered by about half to 5.3 million.
Meanwhile, IPOs in the solar sector have been dominated by China. Four Chinese solar power companies have had their debut in 2007, garnering $1.11 billion, after three solar companies went public in the last two months of 2006, raising $508.8 million, excluding overallotments.
According to IPOHome.com, JA Solar was one of this year's biggest winners with a return on the IPO price of more than 100 percent. JA Solar and its China-based competitors have lured investors with low manufacturing costs compared with US and European solar-cell producers.
Despite solar companies' rush to the public markets, Jefferies & Co. analyst Jeffrey Bencik says the investment boom isn't likely a bubble.
"Solar companies, once they're ramped up, they're solidly profitable," he said. "This is not the Internet bubble. These companies have real products and real profits." 