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[NEW YORK] SunEdison Inc is seeking as much as US$700 million in an initial public offering of a unit investing in wind, solar and hydro projects in emerging markets, the first of its kind.
This year's best-performing US solar company filed Thursday to list the so-called yieldco after buying 757 megawatts of renewable-energy assets in Brazil, China, India and other developing nations. The company also acquired rights of first offer to buy other projects with 1,918 megawatts of capacity.
The TerraForm Global Inc yieldco will own and operate the power-generation assets in high-growth emerging markets, the Maryland Heights, Missouri-based company said Thursday in a statement. Yieldcos allow developers to raise lower-cost capital by selling projects to fund additional ones, while offering attractive returns to shareholders.
The new company gives SunEdison "a separate vehicle with a very different risk profile" and a more "global breadth" than its already listed TerraForm Power Inc. yieldco, Jeffrey Osborne, analyst at Cowen & Co in New York said by e-mail.
"It allows them to accelerate the cash collection from the projects that have been built and are sitting on the balance sheet," he said.
Renewable energy companies like NRG Energy Inc and Abengoa SA have listed similar units, mainly holding assets in the US. Most recently SunPower Corp and First Solar Inc. said in February that they'll form a joint yieldco.
SunEdison has been working to develop projects in emerging economies for more than five years and now has in place a presence that allows them to finance projects at lower costs than locals, Cheif Executive Officer Ahmad Chatila said.
"We have a strong engine for projects in emerging markets," he said in an interview. "The cost of capital is the biggest challenge for renewable energy everywhere but especially so in emerging markets." JPMorgan Chase & Co., Barclays Plc, Citigroup Inc. and Morgan Stanley are acting as joint bookrunners for the offering.
SunEdison's asset purchase also include projects in Peru, South Africa and Uruguay, the company said. Terms weren't disclosed and the transactions are expected to close by the third quarter.
The acquisitions are the first stage of SunEdison's plan to capitalise on providing renewable power to fast-growing emerging markets, Chatila said in the statement.
SunEdison jumped 8.8 per cent to $27.01 at 11:57 am in New York after rising as much as 9.9 percent, the biggest intraday gain since Nov 18. The shares are up 38 percent this year, the most of any U.S. solar company.
The company also said it secured a total of US$362 million in financing from Terraform Global's joint bookrunners to buy renewable energy projects. SunEdison has obtained US$175 million of equity investments from Blackstone Group, Everstream Opportunities Fund II and Altai Capital Management.