Lodestone Energy launches NZD $100m IPO for solar growth

Lodestone Energy has launched an initial public offering to raise between NZD $75 million and NZD $100 million on the New Zealand Stock Exchange. If completed, it would be the exchange's first significant IPO in five years.

The offer price is set at NZD $2.25 a share, implying a post-listing market value of between NZD $440 million and NZD $465 million. None of the company's existing shareholders will sell stock in the offer, and all proceeds are earmarked for expansion and general corporate purposes.

Lodestone is seeking fresh capital to expand both its solar generation portfolio and its electricity retail business. The Auckland-based group develops, owns and operates utility-scale solar farms, then sells the electricity directly to customers. It began with commercial and industrial users and is now moving into the household and small-business market.

The business already operates five solar farms across New Zealand. Those sites generate enough electricity to supply more than 33,000 average New Zealand homes each year, while a sixth project is under construction in Hawke's Bay.

Lodestone is targeting 16 to 18 operating solar farms by the 2032 financial year. That would substantially expand its current footprint and puts the proposed IPO at the centre of a broader growth plan in a market where solar remains a relatively new part of utility-scale electricity generation.

According to Lodestone, it would become the first New Zealand-listed business focused on utility-scale solar generation. The transaction also comes after a long dry spell for sizeable new listings on the NZX, which has faced criticism in recent years over a thin pipeline of large offerings.

Growth plan

The funds will support construction of additional solar farms, growth in customer numbers and other corporate needs. Equity funding forms only part of Lodestone's financing approach, alongside project-level debt, strategic partnerships and cash generated by the business.

Gary Holden, Managing Director of Lodestone Energy, said the IPO was the next step in a business built over several years.

"We founded Lodestone Energy in 2019 with a vision to build a solar farm in every community. Since then, we have built the capability to identify and develop high-quality sites, construct and operate solar farms, and sell the electricity they generate directly to customers. The IPO allows us to continue doing what we have been doing, but at greater scale.

"We currently sell electricity to commercial and industrial customers across New Zealand and have begun selling electricity to household and small-business customers in Hawke's Bay. As we continue to develop and build more solar farms, we expect our customer base and retail footprint to grow alongside them," Holden said.

Lodestone's commercial and industrial customer list includes The Warehouse Group, Inghams, Halls, Pink Batts, Open Country Dairy and Briscoes. Most of the electricity volumes supplied under its commercial virtual rooftop contracts are covered by longer-term agreements lasting from five to 20 years, compared with an industry norm of one to three years.

Demand backdrop

The capital raising comes against a backdrop of expected growth in electricity demand in New Zealand. Lodestone cited Ministry of Business, Innovation and Employment forecasts showing demand rising 21% between 2025 and 2035, driven by population growth, greater electrification of industry and transport, and data centre growth.

Holden said the company's more standardised approach to designing, procuring and building solar farms was lowering costs as it gained experience.

"Over the past six years we have progressively built the capabilities needed to support that growth, bringing together solar farm development, construction and operation with the direct sale of electricity to customers.

"That integrated model is already operating today. It gives us greater control over how we develop and deliver new projects and how the electricity they produce is matched with customers. The IPO is intended to provide additional capital to continue growing that model, adding more solar farms and more customers over time," Holden said.

The company's sixth solar farm, Ongaonga Road in Hawke's Bay, is expected to be built at a cost of about NZD $0.95 million per GWh. That would be about 11% below the average construction cost of its first five solar farms.

That cost comparison is central to Lodestone's argument that its model becomes more efficient as it scales. The group combines development, construction management, operations, maintenance, electricity generation sales and retail activity within one business, giving it a direct link from project development through to end-customer supply.

Investor backing

Holden also pointed to support from current shareholders, who are remaining invested after the float and have agreed to escrow arrangements following listing.

"The IPO is one part of how we are proposing to fund growth. We also use project-level debt financing, strategic partnerships and cash generated by the business, which means the capital we're raising can support a much larger build programme," Holden said.

He added that the absence of sell-downs by existing investors was intended to signal continuity as new shareholders come onto the register.

"Every existing shareholder is staying invested through this IPO and has agreed to escrow periods after listing. That means new shareholders will be coming into the business alongside the people that backed it through its first stage of growth."