First Solar, SunPower Rise as 8Point3 Yieldco Offers Shares

  • 8Point3 raising $102.6 million in first offering since IPO
  • May use proceeds from deal to buy solar farm from First Solar

First Solar Inc. and SunPower Corp., the two biggest U.S. solar manufacturers, rose after their jointly controlled yieldco raised about $102.6 million to acquire completed power plants from its parents.

First Solar rose 4.6 percent to $37.06 at the close in New York, the most since June 28. SunPower rose 3.3 percent to $8.52.

8Point3 Energy Partners LP, the yieldco the two solar companies formed in 2015, priced 7 million shares at $14.65 each, according to a statement after the close of trading Thursday. It’s a sign that investors are again warming to the yieldco business model, which solar and wind developers created to buy their power plants and pay dividends from long-term electricity sales contracts. This is 8Point3’s first share-sale since its initial offering in June 2015, and is expected to close Sept. 28.

“It demonstrates that the model isn’t broken,” Patrick Jobin, an analyst at Credit Suisse Group AG, said in an interview Friday. “It relieves a lot of pressure on the sponsors to find another buyer for these assets.”

Yield companies like 8Point3 and TerraForm Power Inc. fell out of favor a little more than a year ago after the collapse in oil and natural gas master limited partnerships, which provide a similar, tax-advantaged financing mechanism for the fossil fuel industry. That helped usher the April bankruptcy of SunEdison Inc., which hindered the ability of its two yieldcos to raise funds to buy power plants.

“It’s nice to see investors are seeing long-term value again,” Jeffrey Osborne, an analyst at Cowen & Co., said in a interview. He estimates that the potential sale of one First Solar plant-stake to 8Point3 could add $1 to earnings per share. “This helps First Solar more than SunPower right now because they’ve got an off-take under review.”

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