Greentech IPO floodgates might be opening.
The $225M IPO roadshow began Wednesday: A123 = AONE
It's here.
A123's long-threatened IPO has the potential to draw the market’s attention to the energy storage sector. And the IPO will also give us a glimpse on how investment banks and institutional investors like underwriters Morgan Stanley, Goldman Sachs and Lazard Capital Markets will value energy storage firms.
A commenter suggested that a successful IPO needs a great product, a great team, and profits. Well, two out of three ain't bad. This company loses money. In fact, it has lost $146 million since it was founded and has never turned a profit. And, although it has landed deals with Chrysler and Black & Decker (BDK), it lost a titanic contest to sell batteries to the GM Volt, in part because it is small compared to the winner LG Chem.
With more than 1,800 employees and a staggeringly large burn-rate, as well as having taken hundreds of millions of dollars of Venture Capital, A123 has to go public if it can, and there does seem to be an opening.
A123’s product line ranges from 3.6 Wh batteries for portable power applications to larger 65 Wh batteries for electric vehicles. The company is also developing multi-megawatt hour battery systems for utilities that can provide electric grid services including standby reserve capacity and frequency regulation. Where and how its batteries proliferate, however, is an open question. A123 specializes in lithium phosphate batteries: phosphates don't pack as much punch as other types of lithium batteries, but they are safer.
A successful public offering could open the floodgates to more greentech IPOs and usher in the dawn of a finance-rich greentech era. Other Greentech IPO candidates would include Silver Spring Networks, Tesla Motors, Nanosolar and Solyndra. Then again, other once well regarded companies--Imperium Renewables, Nanosys--have come up short on the road to the IPO. The fact that A123 is shipping product is definitely in its favor.
The underwriters have set the 25 million shares at an estimated price range of $8 to $9.50 each. At the top of that range, A123 would have a value of $950 million, based on 100 million shares expected to be outstanding after the IPO.
Some facts:
* A123 Systems Inc. designs, develops, manufactures and sells advanced, rechargeable lithium-ion batteries and battery systems.
* Joint Bookrunners: Morgan Stanley and Goldman Sachs
* Offer Size: ~25.7 million shares (97 percent Primary)
* Greenshoe: 15 percent (100 percent Primary)
* Range: $8.00 to $9.50 per Share
* Launch Date: Wednesday, Sept. 9, 2009
* Roadshow Dates: Thursday, Sept. 10, 2009 to Wednesday, Sept. 23, 2009
* Expected Pricing: Wednesday, Sept. 23, 2009 (post-close)
From Michael Kanellos' recent article on the highlights of the S-1:
* $168.5 million – The total in revenue accrued since early 2006 when it started selling batteries. It breaks down as: $34.3 million (2006); $41.3 million (2007); $68.5 million (2008); $10.3 million (Q1 2008); and $23.2 million (Q1 2009).
* $146 million – Cumulative net losses. Net losses by the year have been: $15.8 million (2006); $31 million (2007); $80.5 million (2008); and $18.7 million (Q1 2009).
* $106.3 million – The total capitalization.
* 75 percent – The amount of revenue that comes from the top three customers. "We believe that the loss of one of these significant customers [BAE Systems] could have a material adverse effect on our revenue," the S-1 states. BAE Systems, which is working with A123 on bus systems, is an interesting touch. In an earlier S-1, it said that Black &Decker "represented 70.7% of our total revenue since inception through March 31, 2008 and represented 55.1% of our total revenue in the quarter ended March 31, 2008." Revenue dipped at the time due to a slowdown from its "most significant" customer.
* 107.5 million – The number of watt-hours, or electrical capacity, contained in the batteries shipped to date. It breaks down as: 20 million (2006); 32 million (2007); 44.9 million (2008); 10.6 million (Q1 2009).
* 151.1 million – The total annual manufacturing capacity, measured in watt-hours, as of March 2009.
* 450,000 square feet – The amount of factory space.
* $96.6 million– The cumulative amount invested in R&D.
It looks like good news for A123 and greentech. Depending on where this prices. Stay tuned.
