Leading ‘Super League’ PV manufacturer Trina Solar has said it plans a ‘growthco’ IPO for its downstream PV project business rather than the current trend towards yieldcos, according to Teresa Tan, Trina Solar’s CFO at World Economic Forum meeting in China this week.
Bloomberg reported today that Tan had backed the growthco model over the yieldco model as this would support the financing of future downstream business development rather than ultimately holding all assets and provide investors with guaranteed returns through dividends.
“Investors usually evaluate a yieldco on its cash flows”, without caring much about development outlook, Tan was reported to have said by Bloomberg. “Growthcos focus on the business outlook,” which may be more attractive in China, she said.
“We will choose to spin off those downstream assets where we can seek reasonable valuation,” Tan added. “Cash flow is of course still very important, but instead of paying out dividends the companies may use that cash to fund asset purchases to secure future growth.”
In Trina Solar’s second quarter earnings call, Tan explained in detail a number of options the company was evaluating to provide US$1 billion in financing for its downstream PV project pipeline, including a possible IPO of the business. Tan had noted that various spin-off options could include a green bond.
“We have discussed our desire to separate the downstream business into a separate listing so that we can create a financing platform for the downstream business, which is quite different from our module business and manufacturing business. So, we believe that this is the way to go as far as timing and as far as the markets where the spin-off could happen. This is very much still in discussions and we are also very much in very active discussion actually with our supporters and resources that we are working with,” Tan said in the second quarter earnings call.
The company is expected to ship between 700MW to 800MW of PV modules to its own downstream projects in 2015, which includes 335MW in China which is already operating and retained in its balance sheet at a value of US$483 million.
However, Trina Solar is not just focused on the Chinese market; it has built projects in the UK and Japan and is targeting becoming a major player in India, having established joint ventures for projects and cell and module production.
Trina Solar's CFO said the company was hoping it could speed up the planning of an IPO for the downstream business, which could currently occur sometime next year or the year after.