While storm clouds have gathered over tech and other sectors during the past year, renewable energy has become a bright spot on the investing map.
Those looking to soak up the sunny potential of solar will be glad to know MN8 Energy, one of the largest renewable energy companies in the U.S., is moving further down the initial public offering (IPO) pipeline.
MN8 made a filing with the Securities and Exchange Commission (SEC) on January 5. It did not announce a date for the launch in the submitted paperwork but plans to list on the New York Stock Exchange (NYSE) under the ticker “MNX.”
The firm did not disclose numbers regarding total units on offer or initial pricing, yet estimates of the deal size have it at the typical placeholder sum of $100 million. This is not the first MN8 filing, however. Formerly known as “Goldman Sachs Renewable Power,” the company filed confidentially in early 2021 under another name before officially filing its S-1 as “MN8 Energy, Inc.” on September 12, 2022. It filed an S-1/A on November 9, 2022, without disclosing terms for the deal, according to a Renaissance Capital briefing.
Founded within Goldman Sachs in 2017, MN8 focuses on delivering solutions for enterprises embarking on their “multi-decade decarbonization journeys.”
It has an expanding fleet of over 850 solar projects in five regions across the United States, generating a total of 2.6 Gigawatts. It has over 200 enterprise clients, including blue chip corporates like Coca-Cola, L'Oréal, and Toyota, as well as government agencies and educational institutions.
One of the latest examples of MN8's client projects is from German automaker Mercedes Benz. Speaking at tech conference CES in Las Vegas last week, Mercedes announced it would roll out a new self-branded global charging network for its electric vehicle models. The project will see MN8 join with Mercedes to complete over 400 charging stations boasting 2,500 ultra-rapid chargers across North America by 2027.
MN8's business model, per its prospectus, is to generate cash flows by selling energy, storage, and related services to high-credit quality customers under long-term contracts (typically at fixed prices).
The company's net revenue was $278 million for the 12 months ending on June 30, 2022, while net income for the period was $192 million. It does not plan to distribute earnings through dividends “in the foreseeable future” and will instead use profits to “finance our operations and the growth of our business.”
This year has seen a dramatic push forward toward renewables. In its 2022 annual report, the International Energy Agency made its largest-ever upward revision to its renewable power forecast. Citing the energy security impacts of the energy crisis and Russia's invasion of Ukraine, the IEA now predicts global renewable capacity to grow by almost 75% between 2022 and 2027.
Within that bright forecast, there seem to be blue skies ahead for the American solar sector – in which MN8 is the market leader. Solar is growing fast, making up 45% of all new power capacity added in the U.S. through the first three quarters of 2022. Moreover, the Solar Energy Industries Association forecasts the market will grow at an average of 21% annually from 2023 to 2027.
Yet renewable energy plays can carry certain risks, as with any investment. These include, among others, regulatory risks stemming from changes to government policies and incentives, price risks owing to fluctuating demand for energy, as well as operational risks, such as lower-than-expected power generation for certain projects.
Investors who are bullish on the trajectory of the accelerating energy transition will likely look well upon MN8 Energy's future prospects for growth.
This article was produced and syndicated by Wealth of Geeks.