Spain’s Abengoa has confirmed its intention to spin off a “yieldco” vehicle in an initial public offering in the US, following a growing string of renewables companies – including NRG and, most recently, SunEdison – in doing so.
While the number of renewables-related yieldcos has been growing in the US for a number of years – starting by many accounts with Brookfield Renewable Energy Partners – the trend has picked up pace over the past year, underscored by the launch of NRG Yield onto the New York Stock Exchange last summer.
For companies like NRG or Abengoa, the launch of a yieldco offers a way to raise relatively cheap money on the capital markets to invest in new projects.
Yieldcos are typically given ownership of a number of operational renewables assets, offering investors steady, low-risk, dividend-like yields.
NRG Yield, for example, has the first right to buy many of NRG’s renewables projects as they are brought on stream.
Recent press reports had suggested that Abengoa too was sniffing around the idea of launching a yieldco, which could take on ownership of such assets as the recently completed 280MW Solana concentrating solar power (CSP) plant in Arizona.
Although Abengoa declined to specify the number of shares it will look to sell or their possible price range, the IPO is said to be worth up to $1bn.
Heavily-indebted Abengoa may also look to fold some of its existing Spanish solar plants into the yieldco, although given Spain’s recent treatment of renewables assets, doing so would likely necessitate significantly higher dividends.
SunEdison last month confirmed plans of its own to launch a yieldco vehicle.