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Jan 27, 2021

Oaktree-backed solar firm Shoals rises after US$1.9 billion IPO

We need to get past the fossil fuel age, level the playing field for renewables: Climate scientist

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Solar-power components maker Shoals Technologies Group Inc. rose as much as 40 per cent in its trading debut after its initial public offering topped expectations to raise US$1.9 billion.

Shares of the Portland, Tennessee-based company, opened at US$31.30 Wednesday after selling for US$25 each in the IPO. The shares were up 28 per cent to US$31.93 at 1:56 p.m. in New York trading.

Shoals, along with an entity controlled by investment firm Oaktree Capital Management, sold 77 million shares Tuesday, after marketing 70 million shares for US$22 to US$23.

The company is the latest in a string of clean-tech companies going public through IPOs or mergers with special purpose acquisition companies, also known as SPACs or blank-check companies. While electric-vehicle companies including Nikola Corp. and Fisker Inc. have garnered the most attention, the deals have included solar companies, too.

SunPower Corp. spun off manufacturer Maxeon Solar Technologies Ltd. in August. Another Oaktree-backed company, solar-tracking solutions provider Array Technologies Inc., raised US$1.2 billion including so-called greenshoe shares in an IPO in October.

Sunlight Deal

On Monday, Sunlight Financial LLC, which provides loans to homeowners for rooftop solar panels, announced that it had agreed to go public through a merger with a blank-check company backed by Apollo Global Management Inc.

Shoals Chief Executive Officer Jason Whitaker said renewables -- and solar in particular -- are continuing to grow amid the decarbonization and electrification trends.

“When you look at solar, not only is it the cleanest, but it’s the cheapest source of power in many markets in the world,” Whitaker said in an interview. “And it’s only going to get more competitive.”

Investors have clamored for green stocks and equities with an ESG bent since Joe Biden emerged as the front-runner for the White House last year, a trend that’s continued since his inauguration last week. Shares of Array and Maxeon, along with at least three other solar companies, have hit all-time highs this month.

Shoals provides so-called balance of systems solutions for solar-power projects. These components include cable assemblies, inline fuses, combiners and junction boxes. The company said it sells its products principally to engineering, procurement and construction firms that build solar projects.

Oaktree Control

Upon completion of the IPO, Oaktree and other investors will continue to control more than half of the voting power of the company’s shares.

For the nine months ended Sept. 30, Shoals had net income of US$19 million on revenue of US$137 million on a pro forma basis, according to its filings.

The offering is being led by Goldman Sachs Group Inc., JPMorgan Chase & Co., Guggenheim Securities and UBS Group AG. The shares are trading on the Nasdaq Global Market under the symbol SHLS.