During the first quarter of 2014, GTM, a reputable market research company on green technology predicted that Vivint Solar would be “one of the likely candidates for an initial public offering in 2014.”
Recently this home security supplier and solar finance provider “confidentially filed” for an IPO of its solar installation business, according to a Reuters report. This confirms the prediction of GMT.
Businesses with less than $1 billion in revenue are the only businesses allowed to confidentially file for an IPO, as required by the JOBS act of the United States, passed on April 5, 2012 by President Obama.
Vivint Solar is the second largest U.S. residential solar installer and solar finance provider in the past several quarters. SolarCity is number one. Interestingly, the market share of Vivint is only around 29%.
This company is actually a solar integrator and PPA (power purchase agreement) financier unit inside Vivint. The mother company, Vivint Inc., is one of the biggest home automation and home alarm system companies in the U.S.
This company has more than 675,000 customers for its automation and home security services across the United States. It was acquired by Blackstone for over $2 billion in September 2012.
Vivint was also able to secure an additional $280 million in tax equity funding, earlier this year. This company has added more than $700 million solar financing last year from undisclosed sources. According to reports, the IPO could occur this coming fall.
Some interesting facts surfaced recently because of the IPO filing of Vivint Solar. It seems that this solar finance company is the fastest growing company in this industry. This company is youngest of the top ten residential installers of solar systems in the country and yet has held the number 2 spot since the start of 2013.
It is also surprising that Vivint is not as active as other national installers such as SolarCity, Solar Universe and Sungevity. This company is only active in a few states, unlike the three which has operations all over the United States.
It appears the Vivint is only putting its efforts into just six states. The company’s expansion to Arizona, which was announced in June, is probably the biggest test of its ability to compete in this business.
However, the company is facing a problem with the state’s property taxes. These taxes will add more than $150 to the cost of an average leased system during the first year of production, negating the savings of many leases.
SolarCity and Sunrun filed a lawsuit against the Arizona Department of Revenue as a reaction to this tax law. This illustrates the difficulty Vivint Solar is facing in Arizona.
The door to door sales strategy implemented by Vivint is the major reason of its slow market development. Vivint adapted this system from its mother company, Vivint, Inc. This method requires a large sales team.
A salesman selling Vivint products is not only expected to sell their system but to take roof measurements, develop a preliminary design, and if possible, close the sale on his first visit.
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