US PV energy provider SunEdison’s yield co vehicle, TerraForm, will begin trading on the NASDAQ stock exchange today.
The IPO of SunEdison’s spin-off project company has already been underwritten to the tune of a little over US$500 million, some of which will be ploughed back into SunEdison’s future project pipeline.
Interest in the yield co has been sufficient to ensure that the 20 million shares available in the IPO be offered at US$25 each, the top end of the range quoted when the stock market launch was first announced.
TerraForm has also increased the size of the initial portfolio that it will hold on behalf of SunEdison from its original 524MW to 807MW in an updated SEC filing submitted on 16 July.
Projects in the portfolio include 134.8MW of distributed generation plants in the US and Canada, and a further 673MW of utility plants in the US, Canada, Chile and the UK.
According to investment analysis website, Seeking Alpha, the success of recent yield co stocks means the IPO could result in TerraForm’s enterprise value exceeding US$4 billion.
That would mean the market values the projects in its portfolio at around US$5 per watt, the site said – around US$2-3 per watt more than the going rate for such assets, and therefore a significant boon to parent company SunEdison, whose stocks accordingly rose yesterday ahead of the IPO.
Yield co vehicles are becoming increasingly popular among renewable developers as they offer access to low-cost capital for future projects, as well as attractive dividend payouts to investors.
An IPO of US developer NextEra's yield co earlier this month netted around US$400 million.