Rooftop solar company Sunrun has set terms for the IPO it is to issue expecting to raise $309 million. The company had filed its IPO plans last month.
Sunrun stated in the filing that it planned to issue 17.9 million shares with price ranging from $13 to $15 per share.
It also planned to give underwriters the option to purchase an additional 2.69 million shares.
Competition in distributed generation of solar power has been increasing significantly in the US. The Q1, 2015 results had shown that more solar panels were installed on American homes in the quarter than ever before.
Over the next five years, another 3 million new home rooftop solar systems are expected to be installed in the US.
The recent acquisition of Vivint Solar, a competitor of Sunrun, by SunEdison is also an indicator of the competition that exists in the industry.
Companies are vying for rooftop space and trying to grow as quickly as possible. And the biggest of the lot should be in a better position to raise finances to make the principal investment in the initial installations.
Besides being able to allocate larger shares of their budget on marketing and sales, companies such as SolarCity have taken efforts to diversify into production of solar modules to lower costs.
Sunrun itself had shown a three-fold increase in revenue year on year to $198.6 million in 2014. In 2013 the revenue had been $54.7 million. Still the company registered loss of loss of $162.6 million in 2014, compared with $68.6 million loss in 2013. The phenomenon showed how cash hungry the sector had become.
According to a report, Sunrun has about $105.5 million cash on hand. With its current burn rate of $52 million in the first quarter, the company will either need to go public by the end of the third quarter or find some other source of financing.
Ajith Kumar S