Sunnova files IPO, hopes to raise $319M

Sunnova Energy, the Houston company that sells and installs residential solar systems, recently filed an initial public offering with the Securities and Exchange Commission to raise as much as $319.1 million by selling stock on public exchanges.

The company, which was founded seven years ago in an apartment in downtown Houston, has grown to 63,000 customers in more than 20 states. Sunnova said it intended to use the money to pay down debt and expand the home solar business, including internationally. Less than 3 percent of the 84 million singlefamily homes in the United States have rooftop solar, which the company said presents an “immense opportunity” for expan

sion.

But the company, which relies on a network of dealer representatives to sell and install its solar systems, has come under fire recently with regulators in Puerto Rico, where the Puerto Rico Energy Bureau received more than 400 complaints from customers who said they never got the savings they were promised, the equipment didn’t work and signatures authorizing credit credits were put on contracts without permission. Customers from New Jersey to California say Sunnova installed defective panels, ignored requests to fix them and delivered the power at higher costs than promised. And the Better Business Bureau, which once gave Sunnova its top score, no longer gives Sunnova an accreditation rating because of the problems in Puerto Rico.

Company officials would not comment because of federal securities regulations concerning initial public offerings. But Sunnova addressed some of the problems it has faced with consumer complaints in its offering document, noting that it’s inevitable given the sheer number of customer interactions with the company or dealers operating on Sunnova’s behalf that would be perceived as less than satisfactory. The consumer complaints have affected the company’s digital footprint on rating websites and social media platforms, and if hiring and training are not managed properly, the company said in the SEC documents, Sunnova’s ability to attract new customers could suffer.

In the SEC filing, Sunnova reported a 2018 net loss of $74.2 million, compared to a net loss of $91.1 million the previous year. The company reported revenues of $104.4 million in 2018, up from revenues the previous year of $76.9 million.

Sunnova expects to sell as many as 20.3 million shares, which have been approved for listing on the New York Stock Exchange under the ticker symbol “NOVA,” between $16 and $18 per share. If all the shares were sold, existing shareholders would own 77 percent of the outstanding shares and investors buying the common stock would own 23 percent.

Sunnova reported to the SEC that it would use about $56.8 million of the proceeds to pay down debt. The company also plans to use the money to buy additional shares, repay other bills, cover operating expenses and supply money for capital expenditures. Sunnova also plans to expand internationally, according to the filing, but details were not provided.

Sunnova told investors that more than two-thirds of its solar systems are concentrated in three locations with 29 percent in New Jersey, 26 percent in California and 14 percent in Puerto Rico.