Powered by Blackstone: Vivint Solar sets terms for $350 million IPO

Vivint Solar, a Blackstone-backed spinoff that provides residential solar energy systems, announced terms for its IPO on Thursday. The Provo, UT-based company plans to raise $350 million by offering 20.6 million shares at a price range of $16 to $18. At the midpoint of the proposed range, Vivint Solar would command a fully diluted market value of $2.0 billion.

The company assumes most of the upfront costs related to installing solar energy systems at customers' residences, and then generates revenue through 20-year electricity contracts with homeowners. Vivint Solar has installed its equipment in over 21,900 homes (39% in the 1H14) across seven states with an aggregate capacity of 130 megawatts. Blackstone acquired parent company Vivint in 2012 for over $2 billion, and plans to sell shares on the overallotment.

Vivint is the second largest installer of residential solar energy systems in the US with an 8% market share, behind close competitor SolarCity (SCTY). Elon Musk's SolarCity remains one of the top IPOs of 2012, and trades about 750% above its IPO price.

Revenue increased over five-fold to $10 million during the six months ended June 30, 2014, compared to the prior year period. Its operating loss tripled to $64 million, which reflects front-heavy installation expenses, much higher sales and marketing costs and fees related to the IPO.  Including related party debt, it held about $132 million of debt at the end of June, which it will pay down with IPO proceeds.

Vivint Solar, which was founded in 2011 and booked $14 million in sales for the 12 months ended June 30, 2014, plans to list on the NYSE under the symbol VSLR. Goldman Sachs, BofA Merrill Lynch, Credit Suisse, Citi, Deutsche Bank, Morgan Stanley, Barclays and Blackstone Capital Markets are the joint bookrunners on the deal. It is expected to price during the week of September 29, 2014.