Fervo Energy eyes $7.4 billion valuation in upsized US IPO

May 11 (Reuters) - Geothermal power developer ‌Fervo Energy ​said on ​Monday it was targeting up to a $7.37 billion valuation in its U.S. upsized initial public offering, underscoring strong investor interest ‌for the listing.

The Houston, Texas-based geothermal company is now seeking up ⁠to $1.82 billion in its IPO by offering 70 million shares priced between $25 and $26 apiece.

It was ‌earlier seeking a valuation of $6.5 ‌billion, offering 55.6 million shares priced between $21 and $24 apiece.

Fervo's upsized offering comes as surging use of AI and the resulting boom in data centers ​pushes up electricity usage, pressuring the U.S. power grid and increasing the need for reliable energy.

AI-linked offerings have also been at the forefront ⁠of the IPO market this year as investors pile into high-growth sectors.

Fervo is among three companies - all ​related to AI infrastructure - set to price their billion-dollar offerings this week, the most in a single week since 2021, ​according to Renaissance Capital, a provider of IPO-focused ‌research and ETFs.

Unlike traditional geothermal energy that relies on rare conditions such as volcanic activity, Fervo is developing advanced ⁠systems that can generate round-the-clock, carbon-free electricity from the source.

The company said it also uses AI for precision drilling to access underground heat more efficiently, while lowering its ⁠surface footprint and reducing drilling risks.

It has roughly $7.2 billion in potential revenue backlog, with 500 ​megawatts currently under construction and 658 megawatts of contracted offtake. Its partners include Southern California Edison, Google and Shell.

In his second term, U.S. President Donald Trump has taken a ‌more favorable stance on geothermal energy than other renewables, even as he reversed Joe Biden-era policies aimed at shifting ‌the world's largest economy away from fossil fuels.

J.P. Morgan, BofA Securities, RBC Capital ⁠Markets, and Barclays are the ‌joint lead bookrunning managers. Fervo ​Energy will list on the Nasdaq under the symbol "FRVO."

(Reporting by Arasu Kannagi Basil and Pragyan Kalita in Bengaluru; Editing by ‌Leroy Leo)

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