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Vivint Solar Has Impressive IPO on the NYSE

Vivint-SolarIn its New York Stock Exchange debut, shares of Vivint Solar, Inc. (NYSE: VSLR) stock, the second largest installer of residential solar panels in the US, saw a 9% increase that put the company value at roughly $1.84 billion. After selling 20.6 million shares at $16 per share, approximately $330 million was raised.

Prior to today’s trading, the Blackstone Group LP-backed company anticipated raising as much as $371 million in its IPO with prices set between $16 and $18 per share. This would put the top-end value at about $1.9 billion.

Blackstone, an investment firm, purchased Vivint’s parent company in 2012 for more than $2 billion. Blackstone owned 97% of Vivint Solar prior to the Initial Public Offering (IPO) but did not sell any shares although its stake depreciated down to 78.2% after the debut.

Vivint Solar, which operates in seven states to include New York and California, was founded by Todd Pedersen, a former Mormon missionary and entrepreneur. His family trust currently maintains 1.8% of the company, which is down from 2.2%.

Vivint Solar controls nearly 15% of the US residential market for solar, and as the second largest business of its kind, falls behind only to SolarCity Corp (Nasdaq: SCTY). Stock for that company rose eight-fold after debuting on the market in December 2012 but is now down in share value.

According to the research firm GTM Research, Vivint Solar is expected to grow 37% annually on a compound basis, pushing megawatt capacity by 2018 to 3,258. Vivint does not charge customers for residential solar panel installation but rather charges for the amount of electricity used at a rate that is approximately 20% to 30% lower than that of local utility companies. The initial customer contract is 20 years, with the rate for electricity increasing slightly each year.

Revenue for Vivint Solar increased over five-fold to $10.06 million for the six months ended in June, compared to 2013 in the same period. This resulted in a profit of $12.5 million opposed to the $20.4 million loss a year prior. The proceeds from the IPO will be used for investments, as well as to repay debt and general corporate purposes.

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