Aspen Aerogels Withdraws IPO
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Aerogels are the lightest solids on Earth, according to NASA, because they are almost entirely made up of air. Pictured here is Aspen Aerogels' blanket insulation.
Aspen Aerogels made headlines in 2011 when it was one of a handful of Massachusetts companies to register for an initial public offering.
But as time went by, there wasn't much word out of the Northborough-based space-age insulation manufacturer. It appeared to be biding its time and waiting for better market conditions.
Now, nearly two years later, the company has withdrawn its IPO registration, it announced Friday.
Financing To Suffice
Aspen once planned to offer up to $115 million worth of stock in its IPO so it could ramp up its manufacturing and chase what some analysts have estimated to be a $4.5 billion market.
Now it will have to rely on debt and equity financing. Luckily for Aspen, there appears to plenty of interest in both.
The company simultaneously announced Friday that it had secured $22.5 million in convertible note debt financing. The sum brings Aspen's total amount of capital over the past several years to about $80 million, according to SEC filings.
Don Young, president and CEO, said in a statement Friday that the new financing will support revenue growth and capital expenditures to improve manufacturing assets. Aspen has a manufacturing facility in Rhode Island.
"We believe our recent financing provides Aspen with the financial flexibility to pursue a range of financing and strategic opportunities in the future," Young said. "This financing is expected to provide Aspen with sufficient funding to continue to grow our business to meet increasing demand for our aerogel blankets. We also remain laser focused on improving our profitability while investing for growth."
From its founding in 2001 through 2010, Aspen never made a profit, according to its SEC filings related to its IPO. The company had an accumulated deficit of more than $202 million over that period. In 2010, it lost $9.9 million on $40 million in sales.
The Aerogel Dilemma
Aerogels are, according to Aspen, a solid matrix gel with air or any other gas disbursed in it. The material contains nano-sized pockets of air that block cold and heat.
It makes for a more compact insulation, and it has caught on in the oil industry with the likes of ExxonMobil, which uses it to insulate pipes and tanks. Aspen's aerogels can also be found in boots, jacket and other outdoor gear.
Though aerogels are superior insulators, they are pricier than fiberglass insulation, according to Boston-based Lux Research, which wrote in 2011 that Aspen's aerogel blankets cost between $10 and $12 per square foot, compared to about 50 cents for standard insulation.
State Of The IPO Market
Since the second quarter of 2011, when Aspen filed its S-1 registration, the IPO market in the U.S. has mostly seen fewer deals and less money each quarter, according to Greenwich, Conn.-based Renaissance Capital, which tracks the market.
During the quarter in which Aspen filed the registration, there were 46 deals worth a total of $12.3 billion, Renaissance research shows. In the first quarter of 2013, there were 31 deals worth $7.6 billion. That sum was flat from the fourth quarter of 2012, but deal volume was up from 29 deals over the quarter.
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