Vivint Solar, owned by the Blackstone Group, set its IPO terms to offer 20.6 million shares at between $16 and $18 per share. That would give the Provo, Utah-based installer and financier a market cap of approximately $1.79 billion, if it priced in the middle of the range. Goldman Sachs, BofA Merrill Lynch and Credit Suisse are serving as lead underwriters.
Ranked second only to SolarCity as an installer, Vivint Solar could also benefit from the increased access to capital afforded by going public.
The IPO hopeful is the solar integrator and PPA financier unit within Vivint, one of the largest home-alarm system and home automation companies, which was acquired by Blackstone for more than $2 billion in September 2012. Vivint has more than 675,000 customers for its home security and automation services across the country.
Here's the updated SEC S-1 IPO registration document, and here is some earlier reporting on the company's financials:
|2012||2013||First 6 months of 2014|
|Megawatts Installed||14.4 MW||58 MW||56.8 MW|
Here are some of the points that caught the eyes of our analysts:
GTM Research's Nicole Litvak provided some analysis on Vivint Solar earlier this month, which is excerpted below.
Surprisingly, Vivint is active in far fewer markets than other national installers such as SolarCity, Sungevity, and Solar Universe (which are active in a dozen or more states). Instead, Vivint has put all of its sales efforts into just six states, not including its recently announced expansion to Arizona. The large gap between SolarCity and Vivint is most drastic in California, but Vivint has beat the national leader in New York and Massachusetts for the past several quarters.
FIGURE: Vivint's State-by-State Market Share, 2013
Source: GTM Research U.S. PV Leaderboard
Vivint Solar is well known for its sales model, which was adopted from its parent company Vivint Inc. and consists almost entirely of door-to-door soliciting (in addition to referrals). This strategy may explain the company’s slow expansion to new states, as it requires hiring a large sales team. The map below shows just how concentrated the door-to-door sales method must be, even when implemented in a small state like Massachusetts. Vivint’s acquisition of Solmetric was meant to further increase the efficiency of its door-to-door sales by allowing sales reps to take roof measurements, create a preliminary design, and potentially close the sale on the first visit. The installer even foregoes state incentives in some cases to speed up the installation process.
FIGURE: Vivint Solar Installations in Massachusetts, Jan. 2012-June 2013
Source: GTM Research report U.S. Residential Solar PV Customer Acquisition
Vivint’s overall business model involves simplifying as many areas of its operations as possible, such as using one primary sales method. Another key area to which this applies is its suppliers. Vivint Solar’s top module suppliers in 2013 were Trina Solar (also the leading supplier to SolarCity) followed by Yingli Solar and Canadian Solar -- three of the top five suppliers to the U.S. residential solar market, according to the GTM Research U.S. PV Leaderboard. The installer also uses just one inverter supplier, Enphase Energy, partly due to the flexibility that microinverters offer for making last-minute changes during installation. Just last week, the two companies signed a three-year strategic agreement to continue this supply relationship. Vivint Solar used only Zep Solar mounting structures until that supplier was acquired by SolarCity.
FIGURE: Module Suppliers to Vivint Solar, 2013
Source: GTM Research U.S. PV Leaderboard
Vivint Solar is one of the industry’s two completely vertically integrated financiers, meaning it both finances and installs systems. Its consumer financing options are limited, in line with the rest of its streamlined operations. Originally, the installer only offered power-purchase agreements, but it has recently added a lease option. Vivint Solar is the only leading financier that has shown no signs of intending to add a loan product.