So far, the last 12 months have been a choppy year for cleantech IPOs in the US.
Electric vehicle battery manufacturer A123 debuted in October 2009 at $20 a share, almost double its estimated range of $10-11. But the first day would be close to its 52-week high. It currently trades around $10, for a $1 billion market cap.
Then in June 2010, electric car builder Tesla Motors launched, beating its $17 target and closing at $19 on its first day.
The high-profile automaker rode a PR wave at its debut, including buzz around how the firm could help revitalize the manufacturing sector in its home state of California, at a time when Detroit's Big Three were still on government life support.
Tesla stock has since held near that level, trading around $21, for a $2-billion market cap, while the broader market has climbed since it's debut.
Finally, on September 28, biofuel-makerAmyris Biotechnologiesdebuted at $16, below its target of $18-20. Since launching, it has traded in the $16-18 range.
U.S. cleantech IPOs have raised $600-$700 million a year during 2008-2010 period, down sharply from a record $3.2 billion in 2007, according to boutique investment bank Greentech Capital Advisors, a trend no doubt exaggerated by both the financial crisis and the ensuing recession.
Uncertainty about government policy hasn’t helped the sector. Though there have been plenty green jobs photo-ops from campaigning politicians of all stripes this year, sweeping climate change legislation stalled in Congress, which has also generated little clarity about long-term subsidies for renewable energy, biofuels and electric vehicles.
Add that to a jittery equities environment overall, says Morgan Stanley’s Genieser, and you get a market that’s still “challenging” but improving.
“As we think about IPOs, when we look back historically, the best times [to launch an IPO] are when volatility is at its lowest point,” he told conference attendees. “Frankly, a lot of money managers out there say, ‘Look, I’ll just play the stocks I currently have; I don’t need to take new bets on new ideas.’”
The VIX spiked to 45 early in the summer, killing risk appetite, but has moved back into the 19-23 range that analysts say should peak investor interest in new companies.
Some markets aren’t waiting—Chinese cleantech IPO activity has been booming in the past year.
According to research firm The Cleantech Group, China accounted for over half the deals and 69 percent of all capital raised from cleantech IPOs in 2009—including LDK Solar and Yingli Green Energy — compared to26 percent for the U.S.
"It's been fashionable to complain about poor cleantech IPO returns in North America, but large returns are being made in China,” says Dallas Kachan, managing director of cleantech research firm Kachan & Co.“All the largest cleantech IPOs for the past four quarters have been in China."But while the Chinese appetite for risk may still be outstripping domestic interest, that could be good news for the long-term viability of the sector.