It is the biggest IPO covering wind and solar assets in India, but neither will the IPO happen in India, nor will the company be listed on the Indian stock exchanges.
Largest energy IPO
Global renewable energy major, SunEdison, which has large operations in India, has put up 1,292 MW of wind and solar assets in its yieldco, TerraForm Global, which is entering the US market with a $1.3-billion IPO by selling 5.6 crore shares.
(An ‘yieldco’ is a company set up by a ‘sponsor’ or a ‘parent company’. The sponsor — in this case, SunEdison — will sell cash-flow yielding operating assets to the yieldco (TerraForm Global), which might come out with an IPO and get itself listed.)
This will be the biggest renewable energy IPO since the Spanish company Abengoa spin-off named ‘Abengoa Yield’ raised $721 million last year. Last month, another American company which has operations in India, First Solar, saw its yieldco, ‘8point3 Energy Partners’ raise $420 million, but the yieldco had no India assets.
TerraForm’s dividend yielding assets, set up or acquired by SunEdison, lie all over the world. Those in India, including assets under development, total 1,292.30 MW.
Of this, 253.5 MW (119.3 MW of wind and 134 MW of solar) are assets already ‘dropped’ into TerraForm. The yieldco has a right, but not the obligation, to buy another 1,038.8 MW of India assets, comprising 412.5 MW of wind and 626.3 MW of solar.
India assets account for 18 per cent of TerraForm Global’s total assets, while for 17.7 per cent of assets it has right to buy from SunEdison.
The ‘yieldco’ mode of raising finance is about two years old and is renewable-energy-centric, (just as ‘real estate investment trusts, or REIT, are real estate-oriented.) In the ‘yieldco model’, fully developed, fully de-risked, dividend yielding assets are sold (or, ‘dropped’, as it is called) into the yieldco, which could then raise funds through an IPO or FPO.
₹210-cr acquisition plans
SunEdison will soon complete the acquisition of 101.6 MW of wind power assets in Rajasthan and Karnataka from Spanish company Fersa Energia Renovables, for $33 million (₹210 crore).
These comprise the 20 MW Bhakrani project in Rajasthan, the 31.2 MW Gadag and the 50.4 MW Hanumanhati projects in Karnataka. Power from these projects is sold at ₹5.46, ₹3.40 and ₹3.70, respectively, under three different power purchase agreements.
Meanwhile, SunEdison recently completed acquisition of 51 per cent stake in a 23.9-MW solar project in Rajasthan from Chinese owner Chint Solar (Zhejiang) Co.