Energy developer Fervo Energy announced on Tuesday that it had raised $1.89 billion in its U.S. initial public offering (IPO), with the amount revised upwards, highlighting investors’ strong interest in the operation.
The Houston-based company sold 70 million shares at $27 each, reaching a valuation of about $7.66 billion. The price range had been raised earlier this week, from $21 to $24 to $25 to $26 per share.
The increasing demand from data centers supporting AI tasks, coupled with the rapid electrification of transportation, housing, and other sectors, is tightening electricity supply in the United States, driving up electricity prices and reinforcing the need for reliable energy.
Fervo develops cutting-edge geothermal systems that produce carbon-free electricity 24/7, providing a reliable alternative to solar and wind energies, which depend on weather conditions.
Fervo is one of three companies seeking to conduct billion-dollar IPOs this week, alongside AI chip manufacturer Cerebras Systems and Blackstone Digital Infrastructure Trust.
J.P. Morgan, BofA Securities, RBC Capital Markets, and Barclays were the joint bookrunners for Fervo Energy’s offering. The company aims to list on Nasdaq under the symbol “FRVO” on Wednesday.
Fervo utilizes Enhanced Geothermal Systems (EGS) technology to overcome the scalability barriers of traditional geothermal energy, which relies on rare conditions such as volcanic activity, and deploys underground monitoring tools, including AI-optimized fiber optic sensors.
It is also constructing its flagship project, Cape Station, in Utah, which is expected to be the world’s largest next-generation geothermal project and start providing electricity later this year.
This IPO comes at a time when tensions in the Middle East have pushed crude oil prices above $100 a barrel, further enhancing the appeal of American energy assets.
Geothermal energy has also benefited from a more favorable regulatory position under the Donald Trump administration than other renewable energies, even as President Joe Biden’s policies aimed to transition the world’s largest economy away from fossil fuels.
