RenaSola: Clouds Darken China Solar IPO

Last year was a bright one for Chinese technology companies going public on U.S. exchanges, and particularly so for those in the solar market. The top performing IPO in 2007 was JA Solar Holdings Co. Ltd. (JASO), a small solar cell maker from China's Hebei province whose shares notched a 285% gain for the year.

The climate might be changing. On Tuesday, American Depositary Shares of ReneSola Ltd. (SOL) -- a Zhejiang province-based maker of the solar wafers used in the cells made by companies like JA Solar -- began trading on the NYSE with anything but a bang. After pricing Monday at $13, the low end of their range, the shares bounced their way up to $13.18 in early afternoon trading.

The market has been tough on solar technology shares so far this year. Shares of SunPower Corp. (SPWR), for example, have been halved, to around $70, just in the past month. Even shares of JA Solar, which wrapped up 2007 trading around $70, have given up 15% so far this year.

In its F-1, which was originally filed Jan. 9, ReneSola said it faces a number of risks. Most of the silicon it uses to create its wafers is recycled from waste acquired from semiconductor industry sources. Demand for this recycled raw material is growing, and ReneSola gets its supply from a very limited number of sources, it said. Competing for this supply are several other large wafer makers.

The outlook isn't completely dark for solar offerings, as noted by Renaissance Capital Monday. Nor has it dampened the will of other China-based technology companies to debut on U.S. exchanges -- witness ATA Inc. (ATAI), a provider of computer-based educational testing services, which began trading Tuesday (as with ReneSola, its shares crawled out of the gate), and BCD Semiconductor Manufacturing, which filed for an IPO Monday.

But the performance of ReneSola could presage a considerably less sunny outlook for IPOs like these in the months ahead. - Olaf de Senerpont Domis

See ReneSola's amended F-1 from SEC.gov
See ReneSola profile from Renaissance Capital's IPOhome
See Jan. 28 article from Investor's Business Daily
See December 2007 story from The Deal