Solar IPOs: Which Solar Firm Will Be Next?

NEW YORK ( TheStreet) -- Rumors of solar-sector initial public offerings surface more often than the IPOs seem to happen. Especially in the past two years, the road from venture-backed to public company for solar players has been blocked by the poor capital markets and solar-specific conditions.

The good news is that at least right now, the solar market has actual IPOs to keep its eyes on. Solyndra ( SOLY), which is planning to go public in a $300 million deal led by Goldman Sachs ( GS) and Morgan Stanley ( MS), was the 12th venture-backed firm to file for an IPO since the end of October, after an IPO lull for venture investments that had not occurred in decades. **

On Wednesday of this week, China's Daqo New Energy, a polysilicon manufacturer, filed with the Securities and Exchange Commission to go public.**

At the same time though, the outlook for solar IPOs is far from clear, with Trony Solar having recently shelved its plans to complete an initial public offering.

Showing a cost advantage, and having a unique technology, is a major component of IPO appeal. Paul Leming, solar analyst with Soleil/Princeton Tech Research, says Solyndra has both appeal factors going for it, and that Solyndra's total installed system cost to customer, in particular, has made the coming IPO an "eagerly awaited one."

STR Holdings ( STRI) went public in November, but it did not achieve it price objective, opening at $10 a share. That was below an estimate of $11 to $13, which had itself been lowered from an initial filing price of $13 to $15. Shares of STR have soared since the IPO, though. On Friday, after a buy rating from Hapoalim Securities analytical bear Gordon Johnson, STR was up more than 80% since its IPO to $18.45.

Daqo New Energy, like STR Holdings, is an exception to the private solar companies usually bandied about in IPO rumors. Like STR, Daqo has an existing, profitable business, in a specific solar niche -- polysilicon production -- as opposed to operating in the module manufacturing or solar systems installation business.

The IPO candidates representing the next generation of solar module technology are often at a stage before which they have a proven competitive cost-structure.

It's obviously a mixed capital markets bag -- a shelved solar IPO; a solar IPO that did not perform as well as expected, but has since been on a share rise; and upcoming IPOs that solar-market watchers hope will set the tone for a much more active public capital raising environment, but which represent very different ends of the solar world -- from raw polysilicon production to the next generation module technology.

We've been here before, and two notable private solar firms come to mind when it comes to the next generation solar IPO rumor mill: Nanosolar and Miasole.

Mind you, if one were to believe various company statements and press reports over the last several years, both Nanosolar and Miasole have already gone public.

Miasole has been backed by high-profile alternative technology venture firm Kleiner Perkins Caufield & Byers, which gets a lot of press for its highest-profile team member, the one-time vice president of the U.S., Oscar-winner in the documentary category, and global warming guru, Al Gore. And Miasole has previously made its own press about an expected IPO. As early as 2006, Miasole's CEO said the solar player planned an initial public offering within 12 to 18 months. That CEO has since left Miasole.

Nanosolar, which has the illustrious Google founders Larry Page and Sergei Brin among its original backers, has also been a staple of solar IPO rumor mongering.

Of course, both Miasole and Nanosolar remain private companies today.

While Solyndra has been a threat to thin film players like Energy Conversion Devices ( ENER), some see Nanosolar as a big threat to U.S. solar bellwether stock First Solar ( FSLR). First Solar is under price pressure from the Chinese polysilicon players regardless of the perceived threat from Nanosolar in its thin film territory.

Nanosolar's CEO Martin Roscheisen has made comments to the green press that the solar company will demonstrate capital efficiency three times the level of First Solar.

All of which sounds great, but will the Nanosolar IPO finally happen as a result of this irresistible capital efficiency, which the market has yet to see in black and white and line item by line item?

Nanosolar's CEO is talking a big game, but the jury is still out.

Soleil/Princeton Tech Research's Leming and other solar analysts say that Nanosolar and Miasole remain the two private solar players most closely watched and expected to be coming in the IPO pipeline.

However, Leming says the IPO outlook for additional solar players has less to do with the relative success of Solyndra than the solar companies' ability to demonstrate cost advantage.

"Miasole and Nanosolar have raised large amounts of capital, but it is still an open question as to whether they can bring their manufacturing costs down to the level where it allows them to really be commercially viable companies. That's been the stumbling block for many solar companies, and appears to be what Solyndra has going for it, but we still don't know for sure with Nanosolar and Miasole," Leming said.

So while solar watchers eagerly await the Solyndra IPO, Leming's comment suggests that additional solar IPOs won't be hitched to the success or failure of Solyndra's offering, but the company-specific cost equation. Nevertheless, it wouldn't be in keeping with the IPO rumor mill tradition if we did not continue to speculate on which solar company is headed to the public market next.

And thus, we ask: Is the next publicly traded solar stock going to be Miasole, Nanosolar -- or will cost issues and capital markets conditions continue to frustrate the attempts by private solar players to tap the public markets?

Will the next publicly traded solar stock be Miasole or Nanosolar -- or nothing?

Miasole will be the next solar IPO after Solyndra.
Nanosolar will be the next to go public after Solyndra.
Solynydra's IPO will be weak, as will the appetite for future solar IPOs.
Miasole and Nanosolar will both go public in 2010.

-- Reported by Eric Rosenbaum in New York.

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