Northborough Firm Looks To The Public Markets
Northborough-based Aspen Aerogels is planning an initial public offering, according to a Securities and Exchange Commission filing from the company.
Since it was founded in 2001, Aspen has not yet been profitable, but has increased revenues in each of the past few years, ending last year with more than $40 million in sales, to go along with a $9.9 million loss.
The venture-backed company, which makes energy efficient insulation products, is hoping to tap in to a recovering IPO market.
There has been a 22 percent increase in the number of IPOs filed this year compared to last, according to Renaissance Capital, a Connecticut-based IPO tracking firm. Meanwhile, proceeds raised from IPOs are up 179 percent so far this year.
"(The IPO market) is on the way to recovery," said Kathleen Smith, a principal at the firm. "But that doesn't mean it's a very friendly place for issuers."
Market Potential
Aspen Aerogels' insulation products are used primarily by government and industrial clients. For example, ExxonMobil and other major energy companies use the insulation products to keep piping and holding tanks at appropriate temperatures.
The company estimates that the international industrial insulation materials and sales business is a $4 billion industry.
Earlier this year, Aspen Aerogels expanded its Rhode Island facility to add a second production line. It hopes to add a third production line at some point next year in either the United States or Europe.
The growth of the company has been fueled by support from venture capital investors.
Aspen BASF Venture Capital of Germany led a $21.5 million financing round last October. The company also raised $10 million through notes last year. In 2011, the firm has already attempted to raise $40 million through a combination of note offerings and new credit lines.
All the new cash has not yet boosted the company to profitablilty. However, revenues have increased and losses have decreased for each of the past three years. In 2008, the company reported $20 million in revenues and a $35 million loss, while in 2009 revenues climbed to $28.6 million and losses fell to $18.6 million.
Smith at Renaissance Capital principal said while there are more IPOs this year raising more money, it is still weighted in favor of the investor, not firms looking to raise cash.
"Investors are saying, ‘Show me why I should invest in your company,'" she said. "It's a buyer's market, not an issuer's one."
Still, she said in hot industries, such as social networking and clean technology, investors may be willing to overlook past financial performance if there is significant upside for growth.
"Investors are looking for growth in a slow growth market," she said. "IPOs are coming back, but it's not a guaranteed exit strategy. Companies have to look at IPOs as a step along the way to their ultimate valuation."
Aspen's IPO is being underwritten by New York banking giant Goldman Sachs. The company plans to list on the New York Stock Exchange under the ticker symbol ASPN.
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