Fervo Energy, a geothermal energy developer, announced on Tuesday that it raised $1.89 billion in its initial public offering in the United States, with the amount being revised upwards, highlighting investors’ keen interest in the operation.
The Houston-based company sold 70 million shares at $27 each, allowing it to reach a valuation of around $7.66 billion. The price range had been raised earlier this week, going from $21 to $24 to $25 to $26 per share.
The growing demand from data centers supporting AI tasks, coupled with the rapid electrification of transportation, housing, and other sectors, is tightening the electricity supply in the United States, driving up electricity prices and strengthening the need for reliable energy.
Fervo develops advanced geothermal systems that produce carbon-free electricity 24/7, offering a reliable alternative to solar and wind energy, which depend on weather conditions.
It is one of three companies seeking 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 lead underwriters for Fervo Energy’s offering. The company aims to debut on the Nasdaq under the symbol “FRVO” on Wednesday.
Fervo utilizes Enhanced Geothermal Systems (EGS) technology to overcome scalability challenges of traditional geothermal energy, which relies on rare conditions like volcanic activity, and deploys underground monitoring tools, including AI-optimized fiber optic sensors.
It is also building its flagship project, Cape Station, in Utah, which is expected to be the world’s largest next-generation geothermal project and start generating 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, enhancing the attractiveness of American energy assets.
Geothermal energy has also benefited from a more favorable regulatory environment under the presidency of Donald Trump compared to other renewable energies, even as he reversed policies from the Biden era aimed at transitioning the world’s largest economy away from fossil fuels.
