Abengoa, SunEdison Spinoffs Show Yieldco Momentum Growing

Abengoa SA (ABGB) is beginning the $600 million initial public offering of its renewable energy unit, in a spinoff that’s being imitated by companies including SunEdison Inc.

The Spanish energy company’s Abengoa Yield Plc unit expects to sell 23.1 million shares for between $25 and $27 a share, generating gross proceeds of $600 million at the mid-price, it said today in a filing. The company has applied to be listed in the U.S. on the Nasdaq Global Select Market under the symbol “ABY.”

Abengoa Yield will be 71.1 percent-owned by Seville-based Abengoa once it’s public and plans to offer a 25.92 cent-a-share quarterly dividend, or about 4 percent a year if sold at the mid-range. Abengoa, which began trading in the U.S. in October, expects the unit to become its main vehicle worldwide to own, manage and acquire renewable and fossil fuel power projects and transmission lines.

It’s one of a half-dozen companies known as yieldcos that energy providers have announced or said they were considering this year to separate units that develop new power projects from those that own and operate completed assets and enjoy a lower cost of capital.

Most recently, SunEdison said on May 29 that it will spin off 524 megawatts of solar projects. NRG Energy Inc. (NRG)’s yieldco unit NRG Yield Inc. raised $431 million in a July offering and the shares have gained 84 percent.

Abengoa Yield will own 710 megawatts of renewable generation, 300 megawatts of conventional power generation and 1,018 miles (1,638 kilometers) of power transmission lines. The company expects net proceeds from the spinoff of $567.6 million after expenses.

Abengoa Yield will initially focus on projects in North America, South America and Europe, with later plans for projects in Africa and the Middle East, according to the filing.

To contact the reporter on this story: Ehren Goossens in New York at egoossens1@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net Todd White, Robin Saponar

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