Silver Spring Networks Looks to Raise $67M in Wednesday’s IPO

Silver Spring Networks Inc., an energy-technology company that designs systems meant to conserve energy, will be tapping the stock market this week by offering 3.7 million shares under the proposed symbol SSNI on the New York Stock Exchange. It expects to raise $67 million in the IPO, says the Wall Street Journal.

The firm’s initial public offering will be only the second for the energy technology sector, which has produced large gains for some energy companies while others have pulled their IPO’s. Solar-panel installer BrightSource Energy Inc., for instance, dropped its IPO plans in April 2012, citing market conditions. The month prior, solar-panel component-maker Enphase Energy Inc. went forward but its stock is currently trading well below its offer price.

SolarCity Corp. pushed through with an IPO in December, but Lyndon Rive, the company’s chief executive, told The Wall Street Journal that investors initially scoffed at the price. The San Mateo, California-based company had initially planned to sell 10.1 million shares between $13 and $15 per share. The company had to cut the price to $8 to bring the deal to market. And yet the share price has now doubled since the IPO.

Silver Spring operates a hardware and software network that’s meant to help utility companies tap the so-called “smart grid.” The smart grid is an electrical infrastructure designed to use energy more efficiently and ultimately lower costs. Companies such as PG&E Corp. and Pepco Holdings Inc. install Silver Spring’s two-way transmitting devices near their customers’ homes and businesses, and these devices, which are connected to the energy grid, send energy-consumption information back and forth between consumers and utilities.

The devices enable utilities to not just monitor usage but to automate services such as meter reading or turning someone’s electrical service off after they have moved, according to the Journal. The devices also help utilities quickly identify when a location has lost power.

But equally important, the smart grid enables utilities to offer customers pricing incentives for using less energy at times when electrical usage is at its peak. The utility can also alert the customer that they will be paying a higher cost if they run an appliance during peak energy usage, with the hope that the customer will opt to use the appliance at another time. The result is the customer can save money and the utility can divert that energy elsewhere on the grid.

But the company’s financials could be an issue. Founded 10 years ago, it has not yet turned a profit. Historically, it’s had strong sales, but last year, revenue fell about 17% to $197 million.

Foundation Capital, an original investor in Silver Spring, will retain about a quarter of the company after the IPO, according to Securities and Exchange Commission documents, while the venture capital firm Kleiner Perkins Caufield & Byers will hold about a 13% stake.

To read the full Wall Street Journal article cited in this story, click here

Post Comment

Your email address will not be published. Required fields are marked *

Featured News Topics