Will A123Systems revive the IPO market?

With Watertown, Mass.-based A123Systems’ IPO this morning, everyone from analysts to its direct competitors are showing peaked interest, weighing in on what it could mean for the cleantech sector.

The company (Nasdaq:AONE), which makes advanced lithium ion batteries for electric vehicles and other applications, began trading on the Nasdaq Stock Market today at an offer price of $13.50 per share with about 28.2 million shares offered (see A123Systems up and climbing after Nasdaq debut).

“We see this as the rebirth of the IPO market,” San Diego-based PowerGenix’s Vice President of Business Development Richard Brody told the Cleantech Group.

Brody said his company, a direct competitor to A123 which makes rechargeable nickel-zinc batteries, is looking for A123’s successful IPO to offer validation of the importance of the cleantech sector, especially in energy storage. To see the market investing in energy storage, he said it boosts his confidence that investors understand its value.

Brody said his company may be going after some of the same opportunities in the transportation and grid storage sectors as A123 with its technology (see PowerGenix non-toxic batteries coming to market).

A123’s primary target for its technology is hybrid and electric vehicle applications, while PowerGenix is looking at applications ranging from power tools and light electric vehicles to potentially grid scale energy storage.

A123, which conducts much of its manufacturing in China and Korea, is looking to establish large-scale manufacturing in the United States. In contrast, Brody said his company isn’t planning to establish manufacturing in the United States. He said PowerGenix uses existing, well-established nickel-metal hydride lines in Asia.

Another competitor, Menlo Park, Calif.-based Imara, which makes rechargeable lithium ion batteries that use nickel manganese cobalt chemistry, is also hoping A123 is wildly successful in its public offering (see Imara launches li-ion battery production). Imara is incorporating its battery technology into power tools and outdoor equipment.

Imara’s CEO Jeff Depew told the Cleantech Group that if the investment community responds well to A123, they’ll hopefully like his company, which he thinks has better, more powerful technology.

Financial support for energy storage could also bode well for Imara because it is looking to raise a new round of funding, although the size is still being determined.

Cleantech Group Analyst Andrew Thomson notes that other cleantech IPOs could follow in A123’s footsteps.

“The A123Systems’ IPO could be a watershed event, easing open the cleantech IPO floodgates,” Thomson said. “Likely candidates for public offerings in the future could include companies such as Silver Spring Networks, Tesla Motors, BrightSource Energy, Solyndra, Solarcentury, First Wind, Nanosolar or Changing World Technologies.”

The public markets began opening up in the spring to offerings from cleantech companies, Thomson said. Evergreen Solar, Itron, SunPower, Suntech Power Holdings, Suzlon Energy, Trina Solar, Vestas Wind Systems and Yingli Green Energy Holding were several of the large cleantech companies that took advantage of the opportunity to provide some relief to their balance sheets.

In addition to funding it raises on the public markets, A123 has said it is planning to use private equity funding as well as money from state and federal programs, including the stimulus package, to support its domestic manufacturing for advanced batteries.

In August, A123 brought in $249.1 million in grant funding from the U.S. Department of Energy (see Johnson Controls scores $299M from DOE for auto batteries).

A123 has also raised more than $300 million in venture capital funding to date from firms including North Bridge Venture Partners, General Electric, Qualcomm, Motorola, Procter & Gamble, Alliance Capital, Sequoia Capital, CMEA Capital, and FA Technology Ventures.

CMEA intended but opted not to comment on today’s announcement.

In an April private equity round led by General Electric, A123 raised $69 million to expand its battery cell and system production facilities in Hopkinton, Mass., and Novi, Mich., in addition to building new factories in Michigan (see A123 secures $69M for smart grid, car batteries).

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