UPDATE 2-Panel installer SolarCity files for $200 mln IPO

(Adds analyst comment) By Nichola Groom

LOS ANGELES, Oct 5 (Reuters) - Solar panel installerSolarCity Corp filed with U.S. regulators to raise up to $201million in an initial public offering that could help rekindleinvestor appetite for cleantech stocks.

Shares of solar panel manufacturers have logged terribleperformances in the last two years as plunging panel priceserased profits. But those lower prices have spurred demand forsolar systems in the United States, helping companies like SanMateo, California-based SolarCity.

SolarCity has expanded rapidly thanks to a business modelthat allows residential customers to lease solar panels fortheir roofs. Rather than paying the large upfront costs requiredfor a solar installation, customers pay a monthly fee.

Companies including Google Inc and U.S. Bancorp

have provided funds to finance SolarCity's projects.Those investors are able to collect a 30 percent federal taxcredit for solar energy systems.

Two of those funds are being audited by the Internal RevenueService, SolarCity disclosed in its filing on Friday.

SolarCity, the largest U.S. solar installer, faces stiffcompetition in the solar lease arena from startups includingSunRun and Sungevity, as well as stalwart solar players such asSunPower Corp .

SolarCity was founded in 2006 by brothers Lyndon and PeterRive along with their cousin, PayPal co-founder and Tesla Motors

Chief Executive Elon Musk. Lyndon Rive is SolarCity'sCEO, Peter Rive is its chief operating officer, and Musk servesas chairman.

In a filing with the Securities and Exchange Commission,SolarCity said it had more than 31,600 solar system customers asof June 30, 2012. That compares with 5,775 on Dec. 31, 2009.

The company's total revenue was $46.6 million in the threemonths ended June 30, compared with $13 million a year earlier.It said it had an accumulated deficit of $70.3 million as ofJune 30.

The company plans to list its common stock on the Nasdaqunder the symbol "SCTY."


SolarCity hopes it can buck the lackluster trend amongrecent cleantech IPOs. Enphase Energy , a solar invertermaker that is one of the only green companies to go public thisyear, closed at $3.65 on Friday after debuting at $6 in March.

Other cleantech companies, including solar thermal companyBrightSource Energy and clean energy company Luca Technologies,cancelled IPO plans at the last minute earlier this year.

But SolarCity's backers have pointed out that unlike mostpublicly traded solar companies, it operates in the part of thesolar market that is benefitting from the freefall in prices.

Still, analysts said it won't be easy going considering theweak performance of solar stocks in the last two years.

"Solar investors are very pessimistic, so it's going to be atough market to come out in," Avian Securities analyst MarkBachman said.

SolarCity said it might use a part of the proceeds from theoffering to expand its current business through acquisitions orinvestments in other complementary strategic businesses,products or technologies.

It said, however, that reductions in or eliminations ofgovernment incentives for solar power could hurt its results andits ability to compete.

In addition, SolarCity said it was notified this month thatthe Internal Revenue Service is conducting audits of two of itsinvestment funds, including a review of the solar installationsthat applied for a popular government cash grant program.

"If ... the Internal Revenue Service determines that thevaluations were incorrect and that our investment funds receivedU.S. Treasury grants in excess of the amounts to which they wereentitled, we could be subject to tax liabilities, includinginterest and penalties, and we could be required to makeindemnity payments to the fund investors," the company said inthe SEC filing.

Goldman Sachs, Credit Suisse Securities and BofA MerrillLynch are acting as the lead underwriters for the offering.

The amount of money a company says it plans to raise in itsfirst IPO filing is used to calculate registration fees. Thefinal size of the IPO could be different.

SolarCity investors include Draper Fisher Jurvetson, DBLInvestors, Mayfield Fund, Shea Ventures and Valor EquityPartners.

(Reporting by Nichola Groom in Los Angeles and Ashutosh Pandeyin Bangalore; Editing by Supriya Kurane, Tim Dobbyn and GunnaDickson)

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