Photographer: James MacDonald/Bloomberg
climate-changed

AES, AimCo Complete $853 Million Deal for Solar Company SPower

  • Institutional investors becoming prime buyers of renewables
  • Fir Tree grew sPower to an operating portfolio of 1.3GW

AES Corp. and Alberta Investment Management Co. completed the $853 million joint acquisition of sPower from Fir Tree Partners Inc., in one of the largest clean-energy deals to date.

sPower, or FTP Power LLC, attracted interest from prospective U.S., Canadian and European buyers, including institutional investors, Jeffrey Tannenbaum, Fir Tree’s founder, said in an interview.

“It’s a message to the investment community that the bell has really rung -- that renewables are a very large asset class for institutional investors,” he said.

Institutional investors are now among potential buyers of yieldcos, publicly traded companies that own wind and solar farms as well as renewable assets, as they search out higher revenues. In March, John Hancock Life Insurance Co. agreed to buy a 49-percent stake in a clean-energy portfolio from Exelon Corp.

The transaction marks the “latest example of a trend away from institutional investment in individual projects and towards investments that bundle a developer, its existing assets and its pipeline into a single package,” Nathan Serota, a New York-based analyst at Bloomberg New Energy Finance, said by email.

The deal comprises $853 million in cash plus the assumption of $712 million in debt.

sPower owns at least 1.3 gigawatts of operating solar projects in 11 states, and has almost 10 gigawatts in development. As of February, operating assets and projects under construction had long-term power purchase agreements with a remaining average life of 21 years.

The deal was unveiled in February, about 10 months after clean-energy giant SunEdison Inc. went bankrupt and as the outlook darkened for some renewable companies.

“This happened during a period of some turmoil,” Tannenbaum said. “You had the SunEdison bankruptcy, a new administration that was talking down renewables. To see that sophisticated institutional investors were being able to look beyond federal support, and believe that this industry has tremendous long-term growth, was very encouraging.”

— With assistance by Chris Martin

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