SunEd buys into Dominion portfolio alongside new investor group

SunEdison unveiled a new strategic partnership with institutional investors and an expansion of its joint venture with Dominion, as it looks for ways to shore up its finances while maintaining its ambitious growth trajectory.

The strategic partnership – with a group of unnamed institutional investors advised by J.P. Morgan Asset Management – will kick off by spending $300m to buy a 33% stake in a 425MW portfolio of solar projects owned by the US utility Dominion.

The partnership – which will be majority owned by J.P. Morgan’s clients – will have the right to acquire Dominion’s remaining 67% stake in the projects.

The initial $300m purchase covers 24 Dominion projects spread across the states of California, Connecticut, Georgia, Indiana, Tennessee and Utah. More than half of the projects are already operational, with the remainder due on-line by the end of 2015.

SunEdison will have the right – but  not the obligation – to buy out the partnership’s stakes in the projects.

Dominion is selling down its stakes in the projects as it shifts its focus to building utility-scale PV assets in home state of Virginia, where it expects to bring 400MW on-line by 2020.

SunEdison on Tuesday also said it will expand its recently formed Utah solar joint venture with Dominion to include the under-construction 265MW Three Cedars project, due for completion in mid-2016.

Each company will have a 50% interest in Three Cedars, with SunEdison set to oversee construction and O&M work.

Last month SunEdison formed the JV with Dominion to help fund and build its 420MW Four Brothers PV project in Utah.

Dominion owns 50% of the cash equity and 99% of the tax equity at both projects, with SunEdison’s stakes set for eventual drop-down into its yieldco TerraForm Power.

SunEdison's latest moves come as it looks for ways to expand and build out its project portfolio in spite of an apparent collapse in investor confidence in the company. SunEdison is bringing a number of outside investors onto projects that it once may have looked to retain sole ownership of.

SunEdison shares have fallen by nearly 60% over the last two months, while shares of its first yieldco, TerraForm Power, are down more than 40%, making it harder and more expensive for the company to obtain finance in some cases.

The partnership with J.P. Morgan’s clients “supports SunEdison’s growth strategy while strengthening our liquidity”, says Paul Gaynor, executive vice president of SunEdison’s EMEA and Americas business unit.

Three weeks ago SunEdison announced a new $1bn warehouse investment vehicle to hold projects off its balance sheet, with a Goldman Sachs affiliate providing $300m of equity and $700m of debt coming from Bank of America, Morgan Stanley and Deutsche Bank.