Europe is ready for more clean-energy yieldcos like PNE Wind AG’s planned initial public offering of 150 megawatts of grid-connected wind farm projects, Chief Executive Officer Martin Billhardt said.
In the current market, each megawatt of capacity is valued at as much as 2.5 million euros ($2.8 million), Billhardt said Monday in a phone interview. The German developer is in talks with “large, experienced” U.S. and U.K. investment banks to prepare the sale, he said.
Yieldcos buy up operating solar projects to channel a steady stream of income to shareholders as dividends. Developers like them because it gives them a place to offload assets so they can recycle capital into new projects. Pension funds like the predictable cash flows they offer.
“Investors in Europe are clearly interested in yieldcos,” Billhardt said. “Yieldcos offer stable and secure returns.” PNE hasn’t yet said where it will hold the IPO planned for the second half of next year.
PNE has invited parties from the infrastructure, utility and private-equity industry to conduct due diligence for the planned sale of its 1.1 gigawatts of Scottish wind farm pipeline, Billhardt said. It expects to sign a deal this summer.
The company, which on Monday confirmed its outlook for as much as 130 million euros of cumulative earnings before interest and taxes in the 2014-2016 financial years, expects to “shortly” announce its first development in South Africa.
The U.K. election outcome confirmed a positive outlook for renewables in Scotland, while the German onshore wind market, Europe’s biggest last year, will be stable or grow this year, Billhardt said.
Yieldco businesses raised a record $5 billion for the solar industry in the past year with sales of stock by companies such as NRG Yield Inc. in the U.S. and Bluefield Solar Income Fund Ltd. in the U.K., according to data compiled by Bloomberg. The business model rose to prominence in the past three years, helping drive investment in renewables to a record $310 billion last year.