Sunrun announces US$630 million in financing from investors

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Sunrun, a leading US third party leasing company, today announced that it had secured more than US$630 million in financing from previous and new investors, including JPM Capital Corporation

The transaction, mostly a tax equity investment with a small project equity component, marks the first investment by JPM Capital Corporation in the residential solar market.

Ori Franco, senior director of finance at Sunrun, who led the transaction, said: “It is a tremendous milestone – JP Morgan is one of the largest, if not the largest, renewable energy tax investors in the country. They've done mostly wind transactions before and one or two portfolios of commercial solar projects in the past. But this is the first residential solar portfolio that they've financed.”

Sunrun has 35,000 homeowners in 11 states, and most recently launched its services in Connecticut. Sunrun has so far attracted enough capital to support the purchase of more than US$2 billion in solar systems and has raised US$145 million in venture capital from Accel Partners, Sequoia Capital, Foundation Capital and Madrone Capital Partners.

Franco said that the JP Morgan tax equity investment represented a step change in how Wall Street viewed solar as an asset class.

“When I came to Sunrun five years ago there were a lot of people doubtful that investors would want to invest in a US$30,000 system or portfolio of US$30,000 systems,” he said.

“Sunrun's residential portfolios are much easier to finance than portfolios of commercial projects or larger scale utility projects. It's easy to underwrite consumer credit and our portfolio of residential assets are very distributed in terms of technology, geography and installation company.

“The more diverse our portfolio is, the lower the risk is for the investor. We've also managed to move the business towards a very standardised customer offering so it's much easier for the investor to underwrite the ultimate customer agreement because they're financing the same agreement. If you were to finance a portfolio of commercial or utility-scale projects, every offtaker would negotiate the PPA differently, the EPC agreements would be slightly different.”

One-third of the fund is already deployed and the remainder will continue to be deployed before June 2014 while the company continues to pursue further financing.

“This US$630 million gives us tax equity investment over an extended period of time which gives a large portfolio of systems which is great for the business and provides stability for the industry,” said Franco.

Sunrun also announced the expansion of its executive team with the appointment of Jason Cavaliere as vice president of project finance. Cavaliere has more than 18 years of experience in structured finance and has completed more than US$7.5 billion in transactions, including US$2.5 billion in renewable energy tax equity investments.

Cavaliere joined Sunrun from Citigroup, where he was instrumental in developing a new lease structure for the residential solar market. He has also held positions with Morgan Stanley and Andersen Consulting.

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