A123 bats battery IPO out the park

Battery manufacturer A123Systems finally unveiled its long-awaited IPO yesterday and immediately enjoyed runaway success, netting an estimated $400m (£250m) and fuelling confidence that the green economy is on the rebound.

The company, which has yet to make a profit, nevertheless saw its shares soar 50 per cent on its first day – the second biggest first-day jump for an IPO this year – giving it a market capitalisation of $1.9bn.

Market interest will have been fuelled by the huge market potential for the kind of Lithium-ion batteries that the firm produces, which are primarily used in hybrid and electric vehicles. Several automakers are investing heavily in plug-in hybrid electric and pure electric vehicles, as they attempt to improve fuel efficiency.

The company priced its common stock at $13.50 per share, and began trading on the NASDAQ exchange yesterday under the ticker symbol AONE. But by the end of the day the price had soared to $20.29, underlining burgeoning investor interest in the clean tech sector.

The hope now is that the IPO's success will encourage other companies to take the plunge. Several other firms are said to be close to an IPO, including Tesla Motors, which recently settled a lawsuit with its founder, raising the possibility that a public listing is on the cards.

The US Department of Energy also clearly has confidence in A123. It awarded the company $249m in August to begin creating a US battery manufacturing facility, based in Livonia, Michigan.

The company said the funds raised through the IPO would be used for capital spending and acquisitions.