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IPO Report: NextEra Energy Partners, LP (NEP)

By  +Follow June 26, 2014 3:36AM
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NextEra Energy Partners IPO, IPO, IPO Report, NextEra Energy Partners IPO report, IPOs today, stocks to buy nowNextEra Energy Partners, LP ($NEP) is a wind/solar 'carve-out' from NextEra Energy (NEE) . NEE is an electric power company with a $43.6 billion market cap and is headquartered in Juno Beach, FL.

Fourteen other companies are scheduled for the week of June 23, 2014.  The complete IPO calendar is available at IPOpremium.

The manager and co-managers are BofA Merrill Lynch, Goldman Sachs, and Morgan Stanley.  The joint managers are Baird, Barclays, BMO Capital Markets, Credit Suisse, KeyBanc Capital Markets, RBC Capital Markets, UBS Investment Bank, and Wells Fargo Securities.

NEP scheduled a $325 million IPO on the NYSE with a market capitalization of $1.52 billion at a price range midpoint of $20 for Friday, June 27, 2014. SEC filings

The price range mid-point recently was raised to $24. The rating is the same.

NextEra Energy Partners IPO Report

Overview

NEP is a wind/solar 'carve-out' from NextEra Energy. NEE is an electric power company with a $43.6 billion market cap.

For the year ending June '15 NEP is projecting a 3.75% yield at the price range mid-point of $20. The parent's yield is 2.9%. 

The projected annual pay-out  growth is 12-15% over the next three years.

Valuation

Glossary

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

projected June '15 yr

       

NextEra Energy Partners, LP (NEP)

$1,860

5.8

31.8

1.9

2.1

18%

             

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

Yield

             

NextEra Energy Partners, LP (NEP)*

$1,860

5.8

31.8

1.9

2.1

3.75%

*Projected yield for June '15 yr

       

Parent/sponsor 2013 yr because seasonal

     

NextEra Energy (NEE)

$43,630

2.9

22.9

2.4

2.5

2.9%

Abengoa Yield plc (ABY)*

$2,980

5.0

55.2

1.6

-0.6

2.8%

*Projected yield for June '15 yr

       

NRG Yield (NYLD)*

$5,670

18.1

84.6

9.0

10.4

2.8%

Pattern Energy Group (PEGI)*

$2,500

12.4

147.1

5.3

3.3

4.2%

*current yield

         
             

Conclusion

NEP is an LP 'carve out' from a large company, NextEra Energy (NEE). NEE has a $43 billion market cap.

NEE plans to feed properties to NEP to produce a 12-15% increase in payout over the next three years.

The current projected payout for the 12 months ending June '15 is 3.75%

The rating on NEP is a buy.

Business

NEP is a growth-oriented limited partnership formed by NextEra Energy, Inc. to own, operate, and acquire contracted clean energy projects with stable, long-term cash flows through its limited partner interest in NEE Operating LP.

NEP will own a controlling, non-economic general partner interest and a 17.4% limited partner interest in NEE Operating LP.

Parent/sponsor

NEE owns and operates approximately 17% of the installed base of United States wind power production capacity and operates approximately 14% of the installed base of United States utility-scale solar power production capacity as of December 31, 2012

NEE has over 42,000 megawatt of generating capacity in 26 states in the United States and four provinces in Canada.

NEE also purchases electric power for resale to its customers and provides risk management services related to power and gas consumption for a limited number of customers.

NEP acquisitions from NEE

Upon the completion of this offering, NEP will own interests in ten wind and solar projects, nine of which will be operational and one of which is expected to be in the final stages of construction.

NEP intends to take advantage of favorable trends in the North American energy industry, including the ongoing trend of clean energy projects replacing aging or uneconomic projects, demand by utilities for renewable energy to meet state RPS requirements and the improving competitiveness of clean energy relative to other fuels.

NEP plans to focus on high-quality, long-lived projects operating under long-term contracts with creditworthy counterparties that are expected to produce stable long-term cash flows.

NEP believes its cash flow profile, geographic and technological diversity, cost-efficient business model, and relationship with NextEra will provide NEP with a significant competitive advantage and enable it to execute its growth strategy.

NEP’s objective is to pay stable and growing cash distributions to the holders of its common units. NEE Operating LP’s partnership agreement will provide that NEE Operating LP will distribute all cash available for distribution to its unitholders on a quarterly basis and NEP intends to use the amount distributed to it to pay regular quarterly distributions to holders of its common units.

Dividend Policy

$0.75 per common unit on an annualized basis, which is 3.75% yield.

NEP intends to target a three-year annual growth rate in its cash available for distribution of 12% to 15% per common unit.

This target is based on NextEra’s stated intention that it plans to offer NEP sufficient NEER ROFO Projects each year to produce such an increase.

NEP believes that the acquisition opportunities associated with NEE Operating LP’s right of first offer for the NEER ROFO Projects, other NEER projects, as well as other acquisition opportunities in North America, all of which have many of the characteristics of the projects in its Initial Portfolio, will give NEP the opportunity to grow its cash available for distribution over time.

While NEP believes its targeted growth rate is reasonable, it is based on estimates and assumptions regarding a number of factors, many of which are beyond its control, and NEP may not be able to grow its business at a rate consistent with its expectations, if at all.

Competition

NEP competes on the basis of contract price and terms, as well as the location of its projects in an industry.

There is a wide variation in terms of the capabilities, resources, scale and scope of the companies with which NEP competes, depending on the market. NEP believes it has numerous competitors with a varied mix of characteristics.

In addition, competitive conditions may be substantially affected by various forms of energy legislation and regulation considered from time to time by federal, state, provincial and local legislatures and administrative agencies.

Such laws and regulations may substantially increase the costs of acquiring, constructing and operating projects, and some of NEP’s competitors may be better able to adapt to and operate under such laws and regulations.

5% stockholders

NextEra 82.6%

Use of proceeds

NEP expects to net $305 million from its IPO. Proceeds are allocated as follows:

$150 million of the net proceeds from this offering to purchase 7,994,883 NEE Operating LP common units from NEE Operating LP. NEE Operating LP will use such net proceeds for general corporate purposes, including to fund future acquisition opportunities.

$154.9 million of the net proceeds of this offering to purchase 8,255,117 NEE Operating LP common units (or 10,692,617 NEE Operating LP common units if the underwriters exercise in full their option to purchase additional common units) from NEE Equity.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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Results for NEP
Shiraz Lakhi
28 Jul 15 10:37:14
Volume Spike Screener: UTILITY #Stocks Trading UP on STRONG Volume-Spike $EXC $SPH $NEP ++ Full List Here: http://t.co/To5XUpJGhS
Penny Stock Secret
28 Jul 15 06:29:31
$71,000 in ONE TRADE!! By Follwing Their Signals More Info Here http://t.co/SVqoMkrw2z .. $NEP $NES $NEU
WKRB News
28 Jul 15 05:59:30
Nextera Energy Partners Upgraded to “Outperform” by Wells Fargo & Co. $NEP http://t.co/j2YRwLUhQS
OTPicks.com
28 Jul 15 04:57:02
http://t.co/stbZjDAnbM clayton: NEP 35.60 Nextera Energy Partners LP $NEP added: clayton http://t.co/wS6mEghmss http://t.co/stbZjDAnbM
OTPicks.com
28 Jul 15 04:56:55
http://t.co/QkCFZ8H3V8 clayton: NEP 35.60 Nextera Energy Partners LP $NEP added: clayton http://t.co/yxw6d6P2Pz http://t.co/QkCFZ8H3V8
Extreme Stocks
27 Jul 15 22:21:47
clayton: NEP 35.60 Nextera Energy Partners LP $NEP added http://t.co/DGZwGaJjdW
clayton
27 Jul 15 22:14:19
NEP 35.60 Nextera Energy Partners LP $NEP added to my watch list. Right now with NEP I am watching the last pr http://t.co/FxgLfSnqQC
binaryoptionsocial
27 Jul 15 12:34:14
#IPO on deck this week: $NK (Bio/Immunotherapy), $VTVT(Bio Alzheimer), $PCON (Containerships), $GLBL (Solar), $NEP… http://t.co/XG5hVFJGig
binaryoptionsocial
27 Jul 15 12:18:40
#IPO on deck this week: $NK (Bio/Immunotherapy), $VTVT(Bio Alzheimer), $PCON (Containerships), $GLBL (Solar), $NEP… http://t.co/XG5hVFJGig
Analyst Actions
27 Jul 15 09:32:02
$NEP: Bullish analyst action by Wells Fargo on NextEra Energy Partners: http://t.co/8I27iztqNZ http://t.co/5T5W3r391g
US Stock Ratings
27 Jul 15 07:33:26
Wells Fargo upgrades $NEP from Market Perform to Outperform http://t.co/iNl5LZNMn7
Bahit Jolaman
27 Jul 15 06:13:01
$CHK Raised to Buy Vs Neutral at SunTrust $FANG Raised to Buy Vs Accumulate: Tudor Pickering $NEP Raised to Outperform at Wells Fargo
Shiraz Lakhi
27 Jul 15 05:39:32
Pre-Open Screener: Friday's Biggest Volume Backed %Decliners in Utility #Stocks $DYN $TERP $NYLD $NEP ++ Full List: http://t.co/wShGOjljEZ
SIAnalystWire
27 Jul 15 05:03:50
Wells Fargo Upgrades NextEra Energy Partners $NEP to Outperform http://t.co/8hZnGaObK0
FirstToMarkets
27 Jul 15 04:45:26
NextEra Energy Partners, LP Upgrade by Wells Fargo (Ranked 8th) to Outperform $NEP #NEP http://t.co/yLugzQa77p
FirstToMarkets
27 Jul 15 04:30:28
NextEra Energy Partners, LP Upgrade by Wells Fargo (Ranked 8th) to Outperform $NEP #NEP http://t.co/yLugzQa77p
Ticker Report
27 Jul 15 04:26:37
Nextera Energy Partners Upgraded at Wells Fargo & Co. $NEP http://t.co/WTRb1SwFjx
ProVesting
27 Jul 15 04:24:03
$NEP: Nextera Energy Partners Upgraded at Wells Fargo & Co. (NEP): http://t.co/YtTt0kyLla
Dakota Financial
27 Jul 15 04:23:56
Nextera Energy Partners Upgraded at Wells Fargo & Co. $NEP http://t.co/fHamWSi17R
ProTradersNews
26 Jul 15 13:28:03
$NEP: Company Shares of NextEra Energy Partners, LP Drops by -8.37%: http://t.co/zn4tqZc8Oy
ProTradersNews
25 Jul 15 09:58:05
$NEP: Nextera Energy Partners Stock Rating Upgraded by Zacks (NEP): http://t.co/myOzKkIx2L
The Legacy News
25 Jul 15 09:57:39
Nextera Energy Partners Stock Rating Upgraded by Zacks $NEP http://t.co/IoJVFHVXPp
US Consumer News
23 Jul 15 15:46:34
Nextera Energy Partners LP upgraded by Zacks to hold. http://t.co/YB3fdhev6N $NEP #NEP
MarketBeatCom
23 Jul 15 15:43:51
Nextera Energy Partners LP upgraded by Zacks to hold. http://t.co/zCK9qxYWG1 $NEP #NEP
Ticker Report
23 Jul 15 15:41:58
Nextera Energy Partners Upgraded by Zacks to “Hold” $NEP http://t.co/x0nZB10VMb
MarketBeatCom
23 Jul 15 04:38:49
Want the latest upgrades & downgrades for $NEP $MEG $AHD $ARAY $MOH? Checkout MarketBeat Daily http://t.co/nSJuDsYidj
InvestWithConf
23 Jul 15 02:15:03
$NEP is rated BUY, 33.5% upside by Wall Street analysts based on average ratings/targets http://t.co/VcL30vfzvk http://t.co/e9eshvo9mR
PENNYSTOCKDON
22 Jul 15 08:40:43
$NEP 35.99 Good entry for upside to 48.00. Use stop loss though as could go either way now.
Vetr Ratings
22 Jul 15 07:13:21
7 users on Vetr are bullish on Nextera Energy Partners LP, indicating a STRONG BUY Rating (4.5 stars) for $NEP http://t.co/CqJpWGIh9a
Capital Market Labs
21 Jul 15 11:47:19
7 Utilities with Great Fundamentals and Golden Cross $UGI $CNL $LG $MSEX $NEP http://t.co/QK0ki3wfqZ http://t.co/oXfHvstwUZ
TimeForGrowth
21 Jul 15 06:06:02
$NEP: Wall Street analysts bullish on NEP's earnings growth: http://t.co/12Bnivxerf http://t.co/pZaFR1YRee
Capital Market Labs
21 Jul 15 05:12:17
7 Utilities with Great Fundamentals and Golden Cross $UGI $CNL $LG $MSEX $NEP http://t.co/QK0ki3NQix http://t.co/nKqdyTCWmw
StockNewsWires
20 Jul 15 21:39:03
$NEP: Bernstein Rating Update on NextEra Energy Partners, LP (NYSE:NEP): http://t.co/JHPDI8lcBY
Vetr Ratings
20 Jul 15 06:24:02
Vetr users have upgraded Nextera Energy Pa... to a BUY Rating (3.5 stars), giving $NEP a target price of $40.39 http://t.co/CqJpWGIh9a
Breaking News Now
19 Jul 15 23:34:03
$NEP: Company Shares of NextEra Energy Partners, LP Drops by -5.52%: http://t.co/i1NAdvQE0Y
				
				
By  +Follow June 26, 2014 3:36AM
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