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Toledo Solar open to acquisitions as infrastructure bill fuels sector, CEO says

Toledo Solar, a privately held maker of solar panels, plans to leverage government infrastructure spending to drive rapid growth, said founder and CEO Aaron Bates. There is also potential for pursuing acquisitions as it expands into development and financing of projects, the executive told this news service.

The Toledo, Ohio-based manufacturer engaged an investment banker and spent significant time during the past
couple of years vetting overtures from blank-check companies before ultimately deciding against the SPAC route, he said. About 60 private shareholders have invested more than USD 40m, and the ownership group – which includes the company’s employees – is looking to tailwinds from the Inflation Reduction Act (IRA) to speed growth as it continues to contemplate exit options, according to the CEO. Those options continue to include a potential IPO, though going public this year or next is unlikely. “We want to make sure we grow the company accordingly over the next two years to maintain…that flexibility,”

Bates said while attending the Intersolar North America conference in Long Beach, California, last week.
Toledo Solar is among the small fraction of panel makers using cadmium telluride instead of silicone in its thin-film
photovoltaic modules, the same technology used by industry giant First Solar [NASDAQ:FSLR]. Where First Solar is focused on selling panels to the utility market, Toledo Solar is pursuing residential and commercial customers as part of its strategy to capitalize on the adoption of cadmium telluride panels already evangelized by First Solar, the CEO said.

New US tax credits and incentives for solar customers and onshore manufacturers are expected to supercharge a sector that was already growing at 20% year-over-year, he said. Since reaching so-called “grid parity” in 2016, solar now has the lowest cost of power generation in the US, surpassing wind, nuclear and coal, as has been reported.

Bates is the chairman of Toledo’s parent company, Atlas Venture Group, which in 2019 acquired the manufacturing  assets of Willard & Kelsey Solar Group, based in the Toledo suburb of Perrysburg.
Toledo Solar open to acquisitions as infrastructure bill fuels sector, CEO says.

The University of Toledo is a key innovation center in the research and development of cadmium telluride
technology; First Solar also has a manufacturing plant in Perrysburg. Since its founding four years ago, Toledo Solar has made a few small acquisitions of companies for their complementary equipment, and would consider additional acquisitions as it builds out an engineering, procurement and construction (EPC) capacity – an initiative set to be announced in the coming weeks, according to the CEO.

Through the EPC business, Toledo Solar plans to self-finance installations and projects, serving as an end-to-end provider of everything needed to get panels to customers, he said. “There may be acquisitions more in the development side, the financing side,” Bates said. Another possibility would be acquisitions to help speed R&D for further development of cadmium telluride technology, he noted. “There’s a lot more innovation to be done on the semiconductor itself,” he said. “In 10-years’ time, (cadmium telluride) will be the dominant technology, is my belief.”

While declining to discuss any M&A discussions involving Tempe, Arizona-based First Solar, Bates noted the companies’ good research relationship, mutual vendors, overlapping supply chains and the fact that many Toledo Solar engineers came from the larger firm. In any exit scenario, the multiple will not be the only consideration. “There’s a reason why we named it Toledo Solar,” he said. “This…is a very sort of Northwest Ohio-centric story. We think about those things.”

By Aldrin Brown in Los Angele

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