Balance of systems supplier Shoals sets terms for IPO

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The Copper Mountain solar project in Nevada features BOS products from Shoals. Image: Sempra US Gas & Power.

Shoals Technologies Group, an electrical balance of systems (BOS) solutions provider for solar and storage projects, has announced the launch of its Initial Public Offering (IPO).

Tennessee-based Shoals will issue 50 million shares of its Class A common stock, of which 10.5 million are offered by the company and 39.5 million by a parent entity of the firm controlled by funds managed by Oaktree Capital Management. The underwriters will be granted a 30-day option to buy as many as an additional 7.5 million shares.

The IPO price is expected to be priced between US$19 and US$20 per share. Shoals intends to list its common stock on the Nasdaq Global Market under the ticker SHLS.

The company said it will use net proceeds from the offering to purchase equity interests from its operating subsidiary and certain existing stockholders and for “general corporate purposes to support the growth of the business”.

Goldman Sachs and JP Morgan are joint bookrunning managers and representatives of the underwriters for the offering. Guggenheim Securities and UBS Investment Bank are joint bookrunning managers, while Morgan Stanley, Barclays and Credit Suisse are bookrunners.

BOS components that Shoals provides include cable assemblies, inline fuses, combiners, disconnects, recombiners, wireless monitoring systems, junction boxes, transition enclosures and splice boxes. Its products are mainly sold to engineering, procurement and construction firms that build solar projects.

In its investment prospectus, Shoals said: “We believe that approximately 54% of the solar energy generation capacity installed in the US during the 12-month period ended September 30 2020 used at least one of our electrical BOS products.”

The company derives most of its revenues from selling ‘system solutions’, which are complete BOS systems that include several products. In 2019, 97% of the company’s revenues were from customers in the US, while 3% was from the rest of the world.

The prospectus also details the company’s estimated financial results for 2020, in which it saw revenues rise 21% year-on-year to between approximately US$174 million to US$176 million. Net income is expected to be up 32%, ranging from US$32 million to US$34.5 million.

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