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Solar cell manufacturer First Solar Inc. (FSLR - Analyst Report) announced that it will sell 8.5 million equity shares. The shares will be offered pursuant to a shelf registration statement previously filed with the Securities and Exchange Commission.
As per the underwriting agreement, the underwriters to the issue were given an option to purchase 1.275 million shares of First Solar to cover over-allotments, if any. The underwriters will be provided a 30-day window to do so.
First Solar intends to utilize the net proceeds from the transaction for general corporate purposes and fund its future development plans. The development plans may include acquisitions of solar PV projects currently under development, joint ventures to develop PV solar power system projects, and strategic investments to develop businesses in new markets.
The increasing global awareness for greener energy has led to growth in the solar industry. The solar cell manufacturers are focusing on developing new solar panels with higher conversion capacity. The consistent R&D by solar cell manufacturers has thus lowered the cost of power generation.
In Apr 2013 First Solar achieved the highest cadmium-telluride photovoltaic module conversion efficiency, achieving a record 16.1% total area module efficiency in tests confirmed by the U.S. Department of Energy's National Renewable Energy Laboratory (NREL).
First Solar has also been active on the acquisition front. From Apr 2013, the company made three acquisitions to expand its market share. We believe the funds raised from equity issue will allow First Solar to not only make strategic acquisitions but continue with its R&D work. This in a way will aid the company to maintain a strong position in the solar industry.
In fact, demand for electricity is ever increasing due to urbanization and industrialization. As per a recent report from the U.S. Energy Information Administration (EIA), the majority of power units to be added in the current system will be generated from natural gas and renewable sources.
The EIA report suggests 20% of the total power to be generated in 2040 will come from renewable sources and solar photovoltaic will play a major role in it. Solar generation capacity is expected to increase by a whopping 1000% to 46 Gigawatt (GW) in 2040 from 2011 levels.
First Solar currently carries a Zacks Rank #3 (Hold). Besides First Solar, other North American renewable energy operators who are going to benefit from the increasing usage of solar cells are SunPower Corporation (SPWR - Analyst Report), SolarCity Corporation (SCTY - Snapshot Report) and Enphase Energy, Inc. (ENPH - Snapshot Report) among others.
Headquartered in Tempe, Ariz., First Solar Inc. designs, manufactures, and sells solar electric power modules using a proprietary thin film semiconductor technology.