SolarEdge files an IPO in order to expand into new markets and bring new products to market faster

Solaredge was ranked the tenth largest global PV inverter supplier in revenue terms during the first 9 months of 2014

Key Points


· SolarEdge, an Israeli solar inverter and power optimiser supplier filed for an initial public offering (IPO) on the Nasdaq exchange in the United States on Wednesday 19th February 2015 with a preliminary valuation of $125 million.

· The IPO is anticipated to raise capital, which will allow SolarEdge to expand into new markets and allow it to release new products.

· Solaredge was ranked the tenth largest global PV inverter supplier in revenue terms during the first 9 months of 2014 (compared to outside the top-fifteen in 2013) due to its strong growth in the United States market.

· IHS estimated that it was the number one supplier of PV power optimisers globally and the second largest supplier of module level power electronics (MLPE) behind US microinverter supplier, Enphase Energy in 2014

· The global residential and small commercial market, which SolarEdge targets, is forecast to grow 18% to reach just under 15 GWac in 2015 and the capital raised via IPO will position SolarEdge to take advantage of this growth in the market and increase its market share globally.

IHS Analysis

SolarEdge has traditionally had a major presence in the residential and small commercial segments in EMEA with a large market share in Germany, United Kingdom and the Middle East. However, in recent years as the market in Europe has declined, it has been one of the more proactive suppliers in entering into key growth markets such as the United States.

In the Americas, it was ranked number five in revenue terms in the first nine months of 2014, compared to eighth in the same period of 2013. This rapid growth was due in part to it being one of the approved inverter vendors for SolarCity which accounted for just under 20% of its global revenues in fiscal year 2014. IHS forecasts that the US residential and small commercial market will grow by 31% to reach over 2GWac in 2015, which is the main target market for SolarEdge and this should enable it to continue its fast growth.

In Europe, the additional capital raised would allow it to consolidate its position in the large residential and small commercial PV markets such as the United Kingdom, Germany. Italy and the Netherlands. It would also enable them to further expand its sales teams and after-sales service by having a local presence in each market which is often critical to success.

Furthermore the IPO would also allow it to expand into new PV markets, invest in research and development (R&D) to bring new products to the market, and allow it to compete more effectively with the largest module level power electronics supplier Enphase. It also would allow them to expand its energy storage offering in order to grow its market share in the energy storage market which IHS forecasts will reach the $8 billion in 2018 .

Compared to Enphase and other microinverter suppliers, Solaredge has so far been more successful in selling its products to the small commercial market. Given that the global market for commercial PV installations is forecast to grow by 55% between 2015 and 2018, this market is crucial to future growth for these companies.

Enphase since its IPO has become profitable reporting a net income of $0.4 million in Q4'14 and it also has expanded into new adjacent markets such as energy storage and operations and maintenance (O&M) in order to diversify its business and become more of an energy provider rather than purely a PV hardware supplier.

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