Ameresco Hopes To Enliven IPO Market
What do you get when you combine a company in a fast-growing sector with an initial public offering market that is recovering after almost two years of inactivity?
Officials at Framingham-based energy efficiency contracting company Ameresco Inc. will find out next week when the privately owned company issues stock on the public market for the first time.
Industry analysts who track the IPO market said company officials should have reason to be optimistic.
"This is a company that has good financial fundamentals, has established itself as being one that can make money, and is in a growing sector," said Ryan Caione, a financial analyst with Hoover's Inc., an Austin, Texas-based business information service. "I think they're striking when the iron is hot."
Taking Stock
Ameresco, founded in 2000, became profitable in 2002. Today, the company has 2,000 customers and 54 offices across the United States and Canada. Last year, the company reported a $19 million profit on about $430 million in revenues.
The company is looking to raise about $120 million through its IPO. According to documents filed with the SEC, it expects to sell 6 million shares of Class A common stock. Current stockholders are also expected to sell another 2.7 million shares. The stock is expected to be priced between $14 and $16 per share.
Following the offering, Ameresco will have two tiers of stock: Class A and Class B. The company's founder, George P. Sakellaris, is expected to own 82.9 percent of the combined voting power for both types of stock.
With the money raised through the IPO, Ameresco is looking to expand its sales staff across the United States, Canada and even enter into European markets, according to SEC documents. The company also plans to pay off about $30 million in outstanding secured credit, as well as pursue possible acquisitions of other companies or technologies.
Ameresco officials could not comment for this story because the company is in a quiet period before the IPO happens. It will be listed on the New York Stock Exchange with the symbol AMRC.
The IPO market is in a recovery phase, according experts. Hoover's estimates a 217 percent increase in IPO deals in the second quarter compared to the same time period last year. It marked the fourth consecutive quarter-over-quarter increase in IPOs, according to Hoovers' tracking statistics.
More companies have been entering into the IPO market, and investors are biting, Caione said.
Eric Guja, a research analyst with IPO tracking firm Renaissance Capital LLC in Greenwich, Conn., said Ameresco officials have reason to be optimistic about a solid IPO performance.
But, he warned that there are some risk factors associated with the company.
Ameresco is a coordinator of energy efficiency services, but it does not offer its own products to implement energy saving programs, Guja explained. That can create high overhead for a company, which must purchase energy efficiency equipment from a third-party vendor for a client's use. Many energy service contractors make their own equipment, Guja said.
Also, many of Ameresco's clients are public entities, like municipalities, states and school systems. Ameresco often creates multi-million dollar plans to reduce energy consumption for clients, but as public funding for states, cities and towns continues to be precarious, these public organizations may hold off on such investments, even if they do save money in the long-term, Guja said.
The good news, as Guja sees it, is that energy efficiency and conservation will be a popular market for years to come. Businesses and public-sector organizations will continue to look to reduce their energy costs and take advantage of government incentives to do so.
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