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  • Sunrun Prices IPO at $14 Per Share

    August 4, 2015

    By: Corrie Driebusch

    WALL STREET JOURNAL – Sunrun Inc. priced its initial public offering at $14 a share late Tuesday, in line with expectations, according to people familiar with the deal.

    The company, which leases solar-power systems to homeowners, and selling shareholders raised about $251 million by selling 17.9 million shares, the people familiar with the offering said. It had planned to sell the shares at between $13 and $15.

    Sunrun is based in San Francisco and has been in operation since 2007. It makes money by installing solar panels on residential homes and receiving monthly payments from homeowners for the duration of the contract.

    Renewable energy was in the news this week following the unveiling of the Environmental Protection Agency’s Clean Power Plan, which intends to slash carbon-dioxide emissions from power plants and could drive growth in renewable resources such as solar power.

    “When you think about the growth potential in the Clean Power Plan, that to me is very favorable for solar growth,” said Ron Silvestri, senior power and utility analyst at Neuberger Berman. “On the other hand…competition for that growth will increase dramatically, and we’re already seeing that.”

    Sunrun competes directly with SolarCity Corp., which went public in 2012, and Vivint Solar Inc., which held its IPO last year and is being acquired by clean-energy giant SunEdison Inc. and its subsidiary, TerraForm Power Inc. SunEdison and TerraForm Power have agreed to buy Vivint for about $1.9 billion in cash, stock and notes.

    At its IPO price, Sunrun has a market capitalization of about $1.4 billion, while SolarCity, whose shares are up about 13% over the past month, is valued at $5.6 billion. SolarCity also has a larger customer base, with 190,000 customers at the end of 2014, compared with the 79,000 customers Sunrun boasts, according to regulatory filings.

    A risk for solar-rooftop companies is the coming expiration of a federal tax credit. The federal 30% investment tax credit for solar panels expires at the end of 2016, after which it drops to 10% for company-owned installations and zero for panels owned by homeowners.

    Sunrun plans to begin trading on Wednesday on the Nasdaq Global Select Market under the symbol RUN. The deal is being led by Credit Suisse, Goldman Sachs, Morgan Stanley, Bank of America and RBC Capital Markets.

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