Over the last few months, we've heard rumors from credible sources that Sunrun was for sale.
This week, Power Intelligence reported that Sunrun, the California-based residentialsolarprovider, "has hired Goldman Sachs to run a strategic evaluation."
A Sunrun spokesperson told GTM, "Given Sunrun's rapid growth, each year the company closes a handful of highly structured financing transactions. Consistent with this ordinary course of business, Sunrun engaged Goldman Sachs to assist with a financing transaction, not a sale."
Options for the venture-capital-funded company would have to include sale, an IPO, or some type of strategic partnership. Goldman Sachs was also involved in the successful SolarCity IPO. SolarCity is trading at $41.35 per share as of press time, up from its $8 strike price in December of last year.
In June we reported that Sunrun had won $630 million from three new funds. As Sunrun co-CEO Edward Fenster explained at the time, “These three funds, closed over the last few months, are for the installation of $630 million in solar facilities."
The third-party-ownership (TPO) business model has driven solar growth in the last three years. TPO uses a lease or lease-like arrangement to provide homeowners and businesses with rooftop PV installations without upfront investments or ownership responsibilities. TPO was started by Sunrun and has been implemented by SolarCity (SCTY), Vivint, Clean Power Finance, NRG, Sungevity, SunEdison (SUNE), and SunPower (SPWR).
Growth of Residential Third-Party Ownership in Solar
Source: U.S. Solar Market Insight Report, Q1 2013
VC investors in Sunrun include Sequoia Capital, Accel Partners, and Foundation Capital -- three respected names in that curious business.
Given SolarCity's stellar stock performance since its IPO, why wouldn't the startup try to reach the public markets?
One anonymous solar investor and industry player said, "SolarCity has a brand name and Musk, [and] that attracts retail investors who don't need to understand the financials of a tax equity solar developer. Sunrun does not have a retail brand and institutional investors have zero appetite for complex financial businesses since the meltdown."
Since Sunrun employs a financing model and uses contractors to perform the installation, its revenue would be less than the vertically integrated SolarCity.
Potential acquirers for Sunrun, which is not for sale, include large private equity firms such as KKR, financing or leasing companies such as GE Capital, or larger solar module firms looking to move downstream.