A123 proves IPO waters are safe for swimming

When A123 Systems made its Nasdaq debut in September 2009, all eyes were on the lithium-ion battery maker to see what its IPO could mean for other cleantech ventures looking to hit the trading floor.

Analysts liked what they saw: A123’s (Nasdaq: AONE) stock increased by more than 50 percent on its first day of trading, bringing in $378 million for the Watertown-based company in what was one of the best-performing IPOs of 2009.

“This news shows other companies that the IPO waters are safe to get into,” says Kathleen Smith, principal Greenwich, Conn.–based Renaissance Capital.

Government investment in cleantech through stimulus dollars was key to the company’s successful IPO, Smith says, boosting investor confidence by signaling support for the sector. In August 2009, eight-year-old A123 was awarded a $249-million Department of Energy grant, slated to go toward developing a battery manufacturing facility in Michigan.

After a slack year, the overall number of IPOs across sectors spiked in the third quarter of 2009, with 17 total offerings—a 240 percent increase from the same quarter one year ago, according to Hoover’s. Renaissance predicts more IPOs in sectors that have been pumped up by stimulus funds, including cleantech and infrastructure companies, though it could take some time between a market signal such as A123’s IPO and other companies going public, Smith says.

A123’s successful outing could bode well for other battery makers, as well, says Neil Maguire, vice president of business development for Bay Area-based lithium-ion company Imara Corporation, which launched its first product in September 2009.