Blackstone Group LP is still interested in solar energy after agreeing to sell its Vivint Solar Inc. unit to SunEdison Inc. for $2.2 billion, just not smaller rooftop projects.
The deal shows the value of having a large and diversified portfolio of power projects. For SunEdison, the world’s largest clean-energy developer, adding Vivint’s rooftop installation business fills a niche in its lineup. It’s an operation that was reaching its limits under Blackstone’s ownership.
“SunEdison is capable of driving this business to heights that would be challenging as a standalone business,” Peter Wallace, partner at Blackstone, said in an interview Monday.
Blackstone has “no plans to go back into distributed generation,” Wallace said, referring to rooftop solar and other small power projects that produce power close to where it’s used.
SunEdison agreed to pay $16.50 a share for Vivint, 52 percent more than Friday’s closing price. Vivint went public in September for $16 a share.
“Portfolios need to be of a certain scale to deliver the cash flow investors requires,” Michael Morosi, an analyst with Avondale Partners LLC in Nashville, Tennessee, said in an interview Monday. “A gigawatt isn’t as much as it used to be.”
Blackstone acquired Vivint when it joined with a group of investors to buy the solar company’s parent Vivint Inc. in 2012 for $1.9 billion. At the time the solar operation was “very nascent,” Wallace said.
“We thought there was an opportunity to aggressively grow that business,” Wallace said. “We invested very heavily.”
The group of investors, led by Blackstone and including Summit Partners, injected about $195 million in Vivint Solar, regulatory filings from last year showed.
After the sale announced Monday, Blackstone will get a stake in SunEdison that Wallace said would be “sub-5 percent.”
This is Blackstone’s biggest solar deal to date, and there will be more to come in what Wallace called an “attractive market.”