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SunEdison Spin-Off TerraForm Power Scores Hot IPO

Paul Ausick

TerraForm Power Inc. (TERP), another spin-off from SunEdison Inc. (SUNE), opened its first day of trading Friday morning at $33.85, more than 33% above its initial public offering (IPO) price of $25. The IPO price Thursday was a range of $23 to $25, after being revised from its original range of $19 to $21.

TerraForm Power is a "yieldco," a company formed to hold the cash-generating assets of its parent company's clean energy assets. Several yieldcos have hit the market since NRG Yield Inc. (NYLD), which came public last July. NRG Yield's share price has jumped 90% since its IPO. In mid-June of this year, Spanish energy company Abengoa S.A. (ABGB) spun-off Abengoa Yield PLC (ABY) and shares have risen about 8.5% since the IPO. Pattern Energy Group Inc. (PEGI) came public last September, and its shares have gained 42% since the IPO.

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TerraForm Power offered 20.1 million shares and raised about $500 million in its IPO, valuing the company at around $2.4 billion. SunEdison will retain nearly 95% of the voting power in the company. The IPO's underwriters have a 30-day option on another 3 million shares.

In addition to the IPO, TerraForm also received gross proceeds of approximately $65 million from two private placements of Class A common shares.

TerraForm Power's shares were trading at $33.48 in the late morning, up nearly 34% from the IPO price.

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