NexGen IPO is today

NexGen [XG 1.68] [link] will hit the open market today for the first time after a successful IPO offer period. XG is a renewable energy subsidiary of Dexter Tiu’s Pure Energy Holdings and is a sister company of Repower Energy Development [REDC 5.50, up 6.0%; 789% avgVol]. Reports indicate that demand was strong enough for XG’s IPO stock to require exercise of the over-allotment option to satisfy subscription applications, but there was no indication that demand exceeded the over-allotment amount. XG will begin trading this morning with a stabilization fund that will run through August 15.

MB bottom-line: I already provided my thoughts on XG’s prospectus, but a bout of COVID prevented me from taking a deeper look at XG’s financials and comparables. XG operates a modest number of solar power plants that generate nearly 14 MW of power but has huge dreams to develop 1,683 MW worth of wind and solar capacity across 17 projects spread out over the next six years. Almost 1000 MW of XG’s pipeline is in offshore wind projects, which appears geared to participate in the Department of Energy’s upcoming round of green power auctions. As for how things will go for XG and its IPO buyers today and in the future, comparisons to REDC’s first-day 1% gain and first-year 10% gain will only take us so far. They’re different companies and they’re coming to market at different times with similar but different circumstances. XG is confident in its ability to develop wind and solar despite its lack of direct experience due to its organizational history of delivering run-of-river hydropower projects which are more complex. Yet, the majority of XG’s plan isn’t just “simple” wind and “simple” solar: over 75% of its pipeline is offshore or floating. XG’s long-term performance will depend on a lot of things, but primarily it will hinge on how well XG’s management team can execute its plan, and for that, we will just have to wait and see.

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