NRG Yield plans major share issue

NRG Yield will issue at least 10.5 million new Class A common shares, worth $542m at 22 July's closing price, to raise money for its proposed acquisition of 947MW of capacity at North America's largest wind farm.

The transaction's underwriters also have the option to buy an additional 1.56 million shares, worth another $80.6m.

NRG Yield, the yieldco spun out of NRG last summer, announced last month its intention to buy seven sub-projects within California's immense Alta Wind facility from Terra-Gen Power for $870m plus the assumption of $1.6bn of non-recourse project financings in place at the projects.

In the event that all the new shares were sold, including those offered to the underwriters, NRG Energy’s current 65.5% stake in NRG Yield would drop to 55.3% due to the dilutive nature of the share issue.

The share issuance will be seen as a testament to the ability of NRG Yield – and perhaps the emerging yieldco sector more broadly – to raise vast sums of money for acquiring big renewables assets.

The proposed acquisition of the Alta Wind projects was called a “landmark investment” for NRG Yield by David Crane, chief executive of parent NRG Energy.

The Alta Wind deal will mark the first time NRG Yield has acquired a major renewable-energy asset not owned by NRG Energy, as part of their "drop-down" arrangement. The acquisition is expected to close in the third quarter.

Last month NRG Yield completed its first acquisition of NRG-owned projects, paying $349m in cash and assuming another $657m in project debt for two 20MW PV arrays and a 550MW fast-start gas plant in California.

The Alta Wind projects NRG Yield is buying were brought into operation between 2011-2014, and collectively employ 386 turbines supplied by GE and Vestas.

Shares in NRG Yield, which had risen 1% on Tuesday, slid by more than 1.5% in after-hours trading following the announcement.