Solar provider ready for Wall Street IPO

Chinese panel maker and solar energy solution provider ET Solar is in talks with investment banks to raise $250 million through an initial public offering in the US, CEO Dennis She said on Monday in Nanjing in East China.

"As the company has made considerable achievements in global engineering, procurement and construction (EPC) and solar power plant solution services, we want to transform it into a 100 percent downstream solar-station construction and operation entity, based on our expertise and strong financing ability in the global market," She said.

ET Solar, based in Nanjing, Jiangsu province, developed and completed 130-megawatt solar plants last year, the most powerful of all the Chinese plants, and it aims to raise that number to 300 megawatts in 2014, She said.

The installation is still low if compared with global leader First Solar, which installed about an 1 gigawatt plant in 2013, but She believed advantages including cost control and efficiency will make his company a leader in the global market by 2018.

Chinese solar companies have been struggling with shrinking overseas market demand, excessive supply and trade barriers. Most companies are looking in two directions: either to explore the domestic market, which has a huge potential and is backed by the government's determination to develop a green economy, or to stretch to a downstream EPC and energy solution segment, which stresses vertical integration and generates higher added value.

She said ET Solar was forced into the second direction in 2008, when its former IPO plan halted after the subprime mortgage crisis struck the US financial market, and it subsequently lacked capital to expand capacity.

ET Solar's revenue hit $500 million, and net profit reached $3 million in 2013, at a time when most Chinese solar companies were still losing money. She said 37 percent of the revenue came from solar station development and that the proportion will expand to more than 50 percent in 2014.

Downstream business is expected to constitute 100 percent of the company's revenue by 2018.

She said the company will soon close a round of private financing, with several funds planning to inject $30 million to $35 million.

Ninety percent of ET Solar's power plant projects are based in the overseas market, She said, noting they are cooperating with the UK's pension fund to build a 70 MW-80 MW solar plant this year.

"The biggest risk of the overseas market comes from uncertainty about policy prospects; however, we would like to bear the risk and work strenuously to make the cake bigger, rather than competing for limited room in the upstream manufacturing links," he said.

Although China has become the world's largest solar market, and the government has set an installation target of 14 GW by the year 2014, She remains cautious about the domestic market.

"Downstream business requires large-scale financing, and private companies are dwarfed by State-owned enterprises in this regard," She said. She's opinion was echoed by Li Xiande, chairman of Jinko Solar. Jinko went public in New York in 2010.

"The authority has been working hard to boost China's solar industry by clarifying rules, but there is still room for improvement regarding creating fair competition. State-owned companies are favored by banks in the domestic market, and financing barriers are blocking some good-quality private companies from competing," he said.