A123 Systems Files for IPO Seeking Up to $175 Million (and Betting on Lucky No. 8?)

8/8/08Follow @bbuderi

August 8, 2008. The Olympics Games begins in Beijing. A123 Systems, the Watertown, MA-based advanced battery maker with big operations in China, files for an IPO.

Coincidence? Maybe not. The number 8 is considered lucky in China because it is similar to the Mandarin word for “wealth.” That’s why the opening cermony for the Olympics began at 8/8/08 at 8 pm in Beijing. Just a guess, but perhaps the folks at A123 are also banking on lucky number 8.

In any case, in a filing today with the SEC, the seven-year-old maker of high-power lithium-ion batteries for applications like GM’s planned Volt electric vehicles and Black & Decker cordless power tools, revealed its plans to sell up to $175 million worth of stock in an initial public offering. The company plans to trade on the NASDAQ Global Market under the symbol “AONE.”

It’s a long-anticipated filing for A123, which has taken in some $132 million in venture funding from the likes of General Electric, MIT, North Bridge Venture Partners, Procter and Gamble, Motorola, Qualcomm, and Sequoia Capital, among others. I profiled the saga of A123, how it was formed around one idea that didn’t really pan out but switched gears to become one of the world’s leaders in advanced lithium ion batteries, back in January. At my last count, the company had six manufacturing plants in China, 1,100 employees, and the largest lithium-ion R&D team in North America.

According to today’s filing, the company has seen sales grow from $34.3 million in 2006 to $41.3 million last year—and it reports $10.3 million in revenue for the first quarter of 2008, up from $8.1 million a year earlier. A123 had a net loss of $30.2 million last year, according to its prospectus.

The filing paints a vivid picture of the potential for A123′s business going forward. Among the statistics it cites:

—The market for advanced batteries for electric vehicles, hybrid electric vehicles and plug-in hybrids is currently $700 million, on its way to some $5 billion by 2012.

—The market for batteries and other energy storage technologies for electric grid services, another A123 focus, was $2.4 billion in 2007 and is expected to surpass $3 billion by 2015.

—The market for lithium ion batteries for portable power tools (A123 makes such batteries for Black & Decker’s DeWalt line) was $411 million in 2007 and is expected to grow to $1.1 billion by 2012.

The company says in its filing that it intends to use the net proceeds from its IPO “for capital expenditures, working capital and other general corporate purposes, including the expansion of manufacturing facilities, repayment of approximately $2.5 million in debt, research and development and sales and marketing expansion.” It might also use some of the funds for acquisitions and other means of growing its business, according to the filing.

A123′s top shareholders include:

North Bridge Venture Partners — 7.8 million shares (13.6 percent)

Gururaj “Desh” Deshpande — 7.3 million shares (12.7 percent)

General Electric — 6.0 million shares (10.4 percent)

Qualcomm — 5.0 million shares (8.8 percent)

Motorola — 4.8 million shares (8.5 percent)

Bob is Xconomy's founder and editor in chief. You can e-mail him at bbuderi@xconomy.com, call him at 617.500.5926. Follow @bbuderi

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  • http://blog.innovators-network.org Anthony Kuhn

    A123 Systems should also be focusing on newer battery technology to help reduce the waste and damage that disposable batteries do after they have run out of juice…

  • Advill

    The problem with A 123 is too much Hypo over what they really have….how many patents they control? Saft or Valence have hundreds, the unreported problems of GM batts will become a headache, marketing unreal promises can convert in commertial nightmares and believe me, one thing is having a tool or Segway (Valence) and other quite different is having a truck ( Tainfield) or car (GM).

    Lithium is a wonderful technology in the wrong application ( at least at present tech level)