IPO Report: 8point3 Energy Partners LP (CAFD)

Francis Gaskins |

8point3 Energy Partners IPO, 8point3 Energy Partners IPO price, 8point3 Energy Partners IPO date, yieldco, First Solar, SunPower, stocks to buy now, IPOs this week8point3 Energy Partners LP (CAFD) is a growth-oriented limited partnership formed by First Solar (FSLR) , $5 billion market cap, and SunPower (SPWR) , $4.3 billion market cap, to own, operate and acquire solar energy generation projects. The company is based in San Jose, CA.

Six other companies are scheduled to IPO for the week of June 15. The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: Goldman Sachs/ Citigroup/ Deutsche Bank Securities/ J.P. Morgan/ Credit Agricole CIB

Co-managers: HSBC, MUFG, Mizuho Securities, Baird

End of lockup (180 days): Wednesday, December 16, 2015

End of 25-day quiet period: Tuesday, July 14, 2015

CAFD scheduled a $400 million IPO  with a market capitalization of $842 million at a price range midpoint of $20 for Friday, June 19, 2015 on Nasdaq.

8point3 Energy Partners IPO Summary

CAFD is a growth-oriented limited partnership formed by First Solar, $5 billion market cap, and SunPower, $4.3 billion market cap, to own, operate, and acquire solar energy generation projects.

Upon completion of this offering, CAFD’s Initial Portfolio, which CAFD will acquire from its Sponsors, will have interests in 432 MW of solar energy projects. CAFD’s primary objective is to generate predictable cash distributions that grow at a sustainable rate.

8point3 Energy Partners Valuation

Glossary

Per share dilution

.

.

-$14.02

     
             

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

8point3 Energy Partners LP (CAFD)

$1,420

n/a

n/a

3.3

3.3

28%

             

8point3 Energy Partners IPO Conclusion

Neutral plus

Formed by 2 solar powerhouses, SPWR and FSLR.

Will own & operate solar farms.

Initial expected yield by mid-2017 is expected to be 4.2%.

SPWR and FSLR shareholders looking for yield can be expected to add CAFD to their portfolios.

Price to book 3.3

8point3 Energy Partners Offering

Twenty-million shares of class A stock to be owned by the public, expected to receive 4.2% annual return by mid-2017, based on projects that will still becoming on line.

Other shareholders:  First Solar (FSLR), $5 billion market cap, and SunPower (SPWR), $4.3 billion market cap.  FSLR will own 31% and SPWR will own 41%.

8point3 Energy Partners Business

CAFD is a growth-oriented limited partnership formed by First Solar (FSLR), $5 billion market cap, and SunPower (SPWR), $4.3 billion market cap, to own, operate and acquire solar energy generation projects.

Upon completion of this offering, CAFD’s Initial Portfolio, which CAFD will acquire from its Sponsors, will have interests in 432 MW of solar energy projects. CAFD’s primary objective is to generate predictable cash distributions that grow at a sustainable rate.

CAFD intends to achieve this objective by acquiring high-quality solar assets primarily developed by its Sponsors that generate long-term contracted cash flows and serve utility, C&I and residential customers in the United States and other select markets, primarily within the countries that comprise the Organization for Economic Co-operation and Development, or the OECD.

8point3 Energy Partners Sponsors

First Solar

First Solar is a leading global provider of comprehensive photovoltaic solar systems, which use its advanced module and system technology.

First Solar develops, finances, engineers, constructs and operates solar power generation assets, with over 10 GW installed worldwide.

First Solar’s integrated power plant solutions deliver an economically attractive alternative to fossil-fuel electricity generation.

From raw material sourcing through end-of-life module recycling, First Solar renewable energy systems protect and enhance the environment. As of March 31, 2015, First Solar had total assets of $6.7 billion.

SunPower

SunPower designs, manufactures and delivers the highest efficiency, highest reliability solar panels and systems available today.

Residential, business, government and utility customers rely on the company’s 30 years of experience.

Headquartered in San Jose, California, SunPower has offices in North and South America, Europe, Australia, Africa and Asia.

As of March 29, 2015, SunPower had total assets of $4.1 billion. SunPower is majority owned by Total S.A., the fifth largest publicly-listed energy company in the world.CAFD believes its relationship with its Sponsors provides it with a significant competitive advantage.

8point3 Energy Partners Competitive Advantages

CAFD’s Sponsors have demonstrated track records of developing solar energy projects in its target markets.

For example, between 2005 and 2014, CAFD’s Sponsors developed, built or supplied solar modules to approximately 39% of the 18.1 GW of solar power capacity installed in the United States and approximately 11% of the solar power capacity installed in the OECD.

8point3 Energy Partners Development Pipeline

As of March 31, 2015, on a combined basis, CAFD’s Sponsors had identified a development pipeline (as defined in the “Certain Terms Used in this Prospectus”) of approximately 13.7 GW of potential solar energy project opportunities, ranging from early-stage to advanced-stage development. CAFD will have a right of first offer, or ROFO, on interests in 1,143 MW of the advanced development stage projects included in this pipeline, all of which are located in CAFD’s target markets.

CAFD’s Sponsors’ development track records are enhanced by their vertically integrated business models across the solar value chain, from solar module and select balance of systems manufacturing to providing engineering, procurement and construction, or EPC, and operations and maintenance, or O&M, services, which enables them to more efficiently develop solar energy projects.

8point3 Energy Partners Competition

CAFD competes on the basis of contract price and terms, as well as the location of its projects.

There is a wide variation in terms of the capabilities, resources, scale and scope of the companies with which CAFD competes. CAFD has numerous competitors with a varied mix of characteristics.

These include CAFD’s Sponsors and growth vehicles similar to CAFD that seek to acquire energy projects from CAFD’s Sponsors or third parties.

In addition, competitive conditions may be substantially affected by energy legislation and regulation considered from time to time by federal, state and local legislatures and administrative agencies. Such laws and regulations may substantially increase the costs of acquiring, constructing and operating solar energy projects, and some of CAFD’s competitors may be better able to adapt to and operate under such laws and regulations.

8point3 Energy Partners 5% Shareholders Pre-IPO

First Solar         43.4%

SunPower         56.6%  

8point3 Energy Partners Dividends

The board of directors of CAFD’s general partner will adopt a cash distribution policy pursuant to which CAFD intends to distribute at least the initial quarterly distribution of $0.2097 (4.2% annualized yield at $20) per Class A share ($0.8388 per Class A share on an annualized basis) and OpCo will distribute at least the minimum quarterly distribution of $0.2097 per common and subordinated unit ($0.8388 per common and subordinated unit on an annualized basis), in each case to the extent CAFD has sufficient cash after the establishment of cash reserves and the payment of its expenses, including payments to its general partner and its affiliates.

CAFD expects that if it is successful in executing its business strategy, CAFD will grow its business in a steady and sustainable manner and distribute to its shareholders and OpCo’s unitholders a portion of any increase in its cash available for distribution resulting from such growth.

8point3 Energy Partners IPO Use of Proceeds

CAFD expects to receive $375 million from its IPO and use it for the following:

to purchase 20,000,000 OpCo common units from OpCo, representing approximately 28.2% of OpCo’s outstanding limited liability company interests after this offering. OpCo intends to use (i) $146.2 million of such net proceeds to make a cash distribution to First Solar, (ii) $191.0 million of such net proceeds to make a cash distribution to SunPower and (iii) $37.8 million of such net proceeds for general purposes, including to fund future acquisition opportunities.

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

Companies

Symbol Name Price Change % Volume
SPWR SunPower Corporation 7.76 -0.20 -2.45 1,739,467
FSLR First Solar Inc. 33.44 -0.15 -0.45 750,327
CAFD 8point3 Energy Partners LP 12.81 -0.28 -2.14 71,207

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