Will The Recovery Act Trigger Alt Energy IPOs?
It goes without saying that the alt energy IPO market has been rather quiet over the past few months. Could this be about to change? Will the slew of alt energy and cleatech incentive programs announced under the Recovery Act, coupled with a return of investors' risk appetite, be enough to convince firms to start going public again?
On Monday, I had a chat with Robert Peterman, who handles cleantech for the TMX Group, the owner of the Toronto Stock Exchange and of the TSX Venture Exchange. In the past few years, Toronto has attracted a number of high-profile cleantech and alt energy stories.
Among other things, Toronto, probably in part because of its heavy mining focus, has been the exchange of choice for several early-stage North American geothermal development companies, including Polaris Geothermal, US Geothermal, Western GeoPower, Sierra Geothermal and Nevada Geothermal.
Mr. Peterman informed me that a geothermal development company with activities in the US West, Southwest and Latin America had filed preliminary documents for an upcoming IPO in Toronto. The company is called Magma Energy Corp. and has one operating facility and a pipeline of projects at different stages of development.
I had a quick glance through the company's preliminary long-form prospectus (accessible here), one of the required documents for a Canadian IPO that typically provides information on the size of the offering, the nature of the firm's activities, what the funds will be used for, etc.
The size of the offering, the pricing of the shares and even the closing date were left blank for now, so there is not much to go with just yet. The company's investment bankers will soon come up with this information so we can get a better idea of what this IPO means. As I discussed last week, geothermal development is a risky enterprise that has more in common with mining exploration than it does with power generation.
A successful IPO for an early-stage geothermal firm would most likely be a positive sign for the alt energy sector as a whole. Recovery Act programs will require that firms raise significant amounts of money, so don't be surprised if activity picks up over the coming months.