Solar provider Sungevity plans to go public through a merger with an asset management firm, betting that its software-based business model will enable it to withstand the current turmoil in the renewable energy industry.
The proposed merger with Easterly Acquisition announced Wednesday values Sungevity at $357 million. Upon completion of the deal, Easterly will change its name to Sungevity Holdings and trade on the NASDAQ stock exchange.
Sungevity, which operates in 13 states, Washington, D.C., and Europe, uses software to assess sites for solar panels and then design, monitor, and manage the systems. A network of partners handles financing and installation.
As The New York Times reports, Sungevity’s market share has lagged behind publicly traded competitors like SolarCity and Sunrun. But CEO Andrew Birch said the merger would give Sungevity easier access to financing to help expand its business, with a goal of bringing solar panels to every house.
The plan “gives us access to the public market, and it gives us access to investors who are looking for exposure to that adoption curve,” he told the Times.
Easterly is investing about $200 million in Sungevity as part of the deal. “Sungevity makes solar simple,” Easterly Chairman Darrell Crate said in a news release. “We believe that our merger with Sungevity will accelerate the pace of its growth and create superior value for our shareholders.”
Similar rooftop solar ventures have been facing headwinds lately amid Wall Street skepticism over the industry’s financial viability. SunEdison filed for bankruptcy and Tesla’s Elon Musk has announced plans to absorb SolarCity into his carmaker.
“Public shareholders appreciate simplicity, transparency and clarity,” Crate told the Times. “The wisdom of making this a software-based, technology-enabled company allows them to scale and capture the revenue growth without having to grow head count at an equal rate.”