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California business startup BrightSource Energy cancels IPO

Companies often face unexpected market conditions that may cause them to change their plans. While it is not always possible to plan for every contingency, it may nonetheless be possible to create a well-rounded business plan that allows a company the flexibility to react quickly and effectively. California-based business startup BrightSource Energy recently experienced this first-hand.

BrightSource is a solar thermal company that builds large solar electric generating systems in desert regions. Currently, its flagship project is a 392-megawatt facility that it is constructing in the Mojave Desert, and which will be the largest solar thermal power plant in the world once construction is finished in 2013. It also recently received a $1.6 billion loan guarantee from the Department of Energy and was due to issue an IPO soon.

However, on April 11, it announced a day prior to when it was going to price its IPO that it would no longer be pursuing the IPO. In a press release it issued late on April 11, it stated “adverse market conditions” as the reason behind the sudden change in course. Recently, the company has come under increased competition from photovoltaic solar panels and natural gas.

A news article about the business startup stated that many analysts believe the company has only two options: either raise more money from private investors or try to get acquired. However, it may also simply be that the company tried to issue an IPO before it was ready, and now it is scaling down its plans to more realistic levels. Moving forward, whether or not the California company is well-positioned to take advantage of future opportunities may well depend on proper planning by its board of directors.

Source: Santa Cruz Sentinel, “BrightSource shelves IPO, walks away from public markets,” Dana Hull, April 12, 2012

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