Battery maker A123 Systems files to go public

Boston-area battery upstart A123 Systems on Friday said that it plans to go public and raise $175 million.

The company, which is not profitable, on Friday filed papers in which it said it intends to raise as much as $175 million, based on the registration filing fee. The money will be used to expand it manufacturing and research facilities as well as pay back about $2.5 million in debt.

A123 Systems was spun out of the Massachusetts Institute of Technology seven years ago to commercialize lithium-ion batteries for a range of applications.

The batteries, which the company says last longer and are more powerful than existing lithium-ion batteries, are already being used in power tools. In its S-1 filing, A123 Systems said it anticipates the portable power market to grow from $411 million to $1.1 billion in 2012.

The company sees more potential in the nascent markets of electric transportation and energy storage, according to the filing.

The company has developed batteries for plug-in hybrid cars and acquired Hymotion, which retrofits hybrids with bigger batteries. General Motors is testing A123 Systems batteries for use in its planned plug-in hybrid, the Chevy Volt.

A123 Systems' battery platform is being used for power tools, transportation, and power grid energy storage.

(Credit: Martin LaMonica/CNET News)

Batteries for transportation now represents a $700 million business and can grow to $5 billion by 2012, the company said.

Last month, a company executive indicated for the first time publicly that A123 Systems is also pursuing energy storage on the power grid with a dedicated group.

Energy storage, where devices are used to smooth out short-term fluctuations in the power grid and store wind or solar power, is anticipated to grow from $2.4 billion last year to $3.1 billion in 2015, according to A123 Systems. It also indicated that it is working with utility AES on grid-storage projects.

The company, which will be listed under the "AONE" ticker, made $35 million last year, but it's losses mounted to $31 million last year. In the first three months of this year, it lost almost $14 million.

Bankers for the planned initial public offering will be Morgan Stanley, Goldman Sachs, Merrill Lynch, Pierce, Fenner & Smith, as well as Broadpoint Capital and Lazard Capital Markets.

A123 Systems' IPO has been expected and rumored for months.

It will be closely watched by the the clean-tech industry which has seen a huge influx of venture capital into start-ups and a number of public offerings despite a generally poor environment for stock market entrances.

The company was originally funded by a number of corporations including General Electric and the Duracell division of Procter & Gamble, as well as venture capital firms Alliance Capital, Sequoia Capital, North Bridge Venture Partners, CMEA Ventures, and FA Technology Ventures.

Updated at 8:40 a.m. PDT with more financial details from S-1 filing.