Yesterday (June 25) Sunrun announced that it filed a Form S-1 for an initial public offering (IPO) of stock. The company plans to issue more than 54.8 million shares of common stock on NASDAQ trading under the ticker RUN. In doing so it joins SolarCity and Vivint Solar in becoming a publicly traded residential solar company. The IPO will help ease access to capital to grow the company.
Some are anticipating the company will raise much more than the form stated. The Silicon Valley Business Journal reported for instance, that Renaissance Capital, an IPO-focussed research firm, anticipated that it could raise five times the $100 million it anticipates. The journal, for instance, noted that Vivint Solar raised $330 million when it went public in Sept. 2014 and SolarCity raised more than $900 million when it went public. SolarCity’s stock currently trades at about six times its IPO price.
The filing is preliminary so the date for the IPO as well as planned stock pricing is not yet set. While the company’s CEO Lynn Zurich said the company is expecting to net about $100 million from the sale at least one source anticipated it could raise as much as $500 million through the offering.
In the filing Sunrun said that it has roughly 79,000 customers across 13 states. Its customers are signed to 20-year contracts providing a long-term stable return on Sunrun’s investment. “As of March 31, 2015, our estimated nominal contracted payments remaining was approximately $1.7 billion, and our estimated retained value was $1.1 billion,” the company said.
To gain customers the company currently uses three channels: direct-to-consumer, solar partner channel and its strategic partnerships. Through those channels the company has installed 430 megawatts of solar power.
In the filing Sunrun also laid out its market opportunity. It asserted that the residential solar market remains underpentrated and that much of the growth has been through the residential solar service model that’s offered by Sunrun and its competitors. “Additional financing alternatives such as loan products have also served to continue to expand the market,” the filing stated. “Today, residential solar has penetrated less than 1 percent of the 83 million single family detached homes in the United States. The total residential electricity revenues in the United States were $175 billion in 2014 and are expected to reach $208 billion by 2020.” Moreover it cited figures from GTM Research and the Solar Energy Industries Association, which anticipated a 27 percent compounded annual growth rate in residential solar installations across the U.S., growing the market to 5,242 megawatts of residential solar in 2020.
In the filing the company noted that it raised $1.5 billion in tax equity to fund the installation of solar energy systems with an estimated value of $3.1 billion. The company also stated that 17 of its investment funds have come from repeat investors. Such numbers should help assuage investors because the company has reported an net loss. Last quarter, for instance, it said it lost $52.5 million on revenue of $49.6 million.Tweet