IPO Report: TerraForm Global (GLBL)

Francis Gaskins |

TerraForm.jpg

TerraForm Global (GLBL) is a high-growth, globally diversified renewable energy company that owns long-term contracted wind, solar and hydro-electric power plants. The company is based in Bethesda, MD.

Five other companies are scheduled for the week of July 27. The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: J.P. Morgan, Barclays, Citigroup, Morgan Stanley
Co-managers: Goldman Sachs, BofA Merrill Lynch, Deutsche Bank Securities, BTG Pactual/ Itaú BBA, Kotak Investment Banking, SMBC Nikko, SOCIETE GENERALE

End of lockup (180 days): Wednesday, January 27, 2016
End of 25-day quiet period: Tuesday, August 25, 2015

GLBL scheduled a $1.1 billion IPO with a market capitalization of $3.6 billion at a price range midpoint of $20 for Friday, July 31, 2015 on Nasdaq.

TerraForm Global Summary

GLBL is a high-growth, globally diversified renewable energy company that owns long-term contracted wind, solar and hydro-electric power plants.

GLBL’s business objective is to increase its dividend to stockholders by continuing to acquire, from SunEdison and unaffiliated third parties, clean power generation assets that produce high-quality, long-term contracted cash flows, primarily by serving utility and commercial customers with strong credit profiles.

TerraForm Global Valuation

Glossary

Accumulated deficit (mm)

.

.

-$22

     

Per share dilution

.

.

-$12.77

     
             

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

TerraForm Global (GLBL)

$3,580

7.9

106.5

1.8

2.8

32%

             

TerraForm Global Conclusion

Neutral

5.5% dividend

Sunedison (SUNE) owns 99% pre-IPO.

SUNE market cap is $7bb

Expect more accretive acquisitions

19 years remaining on power purchase agreements

Price to book of 1.8

Annualized P/E of 106

Price to sales of 7.9

TerraForm Global Business

GLBL is a high-growth, globally diversified renewable energy company that owns long-term contracted wind, solar and hydro-electric power plants.

GLBL’s business objective is to increase its dividend to stockholders by continuing to acquire, from SunEdison and unaffiliated third parties, clean power generation assets that produce high-quality, long-term contracted cash flows, primarily by serving utility and commercial customers with strong credit profiles.

Sunedison (SUNE) owns 99.6% pre-IPO.  Market cap $7bb.  From July 20 to July 24 SUNE declined from $33 to $25.44.  The parent SUNE doesn't pay a dividend.

TerraForm Global Target Markets

GLBL’s initial target markets will be China, Brazil, India, South Africa, Honduras, Costa Rica, Peru, Uruguay, Malaysia and Thailand.

Several of these markets, including China, Brazil and India, are expected to be among the fastest growing solar and wind energy markets worldwide from 2015 to 2020 in terms of annual installations and capital investment in renewable energy projects.

GLBL’s initial portfolio consists of solar projects located in China, India, South Africa, Honduras, Uruguay, Malaysia and Thailand, wind projects located in China, Brazil, India, South Africa, Honduras, Costa Rica and Nicaragua and hydro-electric projects located in Brazil and Peru.

TerraForm Global Cash Generation for Distribution Forecasts

These projects have a total combined capacity of 1,406.1 MW, and GLBL forecasts that it will generate an aggregate of $231.5 million of cash available for distribution for the year ending December 31, 2016.

TerraForm Global Initial Portfolio

GLBL’s initial portfolio includes 921.7 MW of projects that GLBL expects to acquire from third parties concurrently with the completion of this offering or during the remainder of 2015.

TerraForm Global Supported by Power Purchase Agreements

All of these projects are supported by power purchase agreements, or “PPAs,” with creditworthy counterparties. The PPAs for projects included in GLBL’s initial portfolio have a weighted average remaining life of 19 years as of March 31, 2015.

TerraForm Global Diversifed Project Portfolio

GLBL has a well diversified project portfolio, across both geographies and renewable energy technologies, which GLBL believes enables it to generate consistent quarterly cash flows.

For example, projects in GLBL’s initial portfolio located in any single country are not expected to represent more than 30% of its projected cash available for distribution for the year ending December 31, 2016.

GLBL intends to rapidly expand and diversify GLBL’s initial portfolio by acquiring utility-scale solar and commercial and industrial distributed solar, wind and hydro-electric power generation assets located in its initial target markets, which GLBL expects will also have long-term PPAs with creditworthy counterparties.

GLBL expects to pursue opportunities in other high-growth emerging markets that have characteristics similar to those of GLBL’s initial target markets, with a focus on markets located in Asia (except Japan), Africa, Latin America and the Middle East.

Over time, GLBL may selectively acquire other clean power generation assets, including natural gas, biomass and hybrid energy and storage solutions, as well as transmission lines, that enable GLBL to provide power on a 24/7 basis, as well as to add solar generation assets serving residential and commercial building customers.

TerraForm Global Intellectual Property

GLBL owns or has rights to various trademarks, service marks and trade names that GLBL uses in connection with the operation of its business.

The SEC filing may also contain trademarks, service marks and trade names of SunEdison, Inc. and third parties, which are the property of their respective owners.

GLBL’s use or display of third parties’ trademarks, service marks, trade names or products in this prospectus is not intended to, and should not be read to, imply a relationship with or endorsement or sponsorship of us.

Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus may appear without the ®, TM or SM symbols, but such references are not intended to indicate, in any way, that GLBL will not assert, to the fullest extent under applicable law, its rights or the right of the applicable licensor to these trademarks, service marks and trade names.

TerraForm Global Competition

GLBL competes to acquire new projects with a large and diverse group of developers who retain power plant ownership, independent power producers, financial investors and certain utilities.

These competitors range in terms of size, geographic focus, financial resources and operating capabilities.

GLBL also competes to supply energy to its potential customers with a limited number of utilities and other providers of distributed generation.

Based on the strong asset development pipeline and acquisition track record of its Sponsor, GLBL believes that it competes favorably with its competitors based on the following factors in the regions in which GLBL operates.

GLBL competes with other developers, independent power producers and financial investors based on its relationship with its Sponsor and its development expertise, pipeline, global footprint and brand reputation.

To the extent GLBL re-contracts projects upon termination of a PPA, GLBL competes with traditional utilities primarily based on cost of capital, generation located at customer sites, operations and management expertise, price (including predictability of price), green attributes of power, the ease by which customers can switch to electricity generated by GLBL’s energy systems and its open architecture approach to working within the industry, which facilitates collaboration and project acquisitions.

TerraForm Global 5% Shareholders Pre-IPO

SunEdison (SUNE) 99.6%         

TerraForm Global Dividends

GLBL’s quarterly dividend will initially be set at $0.275 per share of its Class A common stock, or $1.10 per share on an annualized basis, and the amount may be changed in the future without advance notice.  That's 5.5% on an annualized basis.

TerraForm Global Use of Proceeds

GLBL expect to receive approximately $1,041.4 million of net proceeds from the sale of the Class A common stock offered hereby based upon the assumed initial public offering price of $20.00 per share.

Sources of funds

   

Uses of funds

 

(in millions)

         

Class A common stock offered

Repayment of Bridge Facility

 

$

$1,131

 

 

$

$463

Repayment of Bridge Facility

 

Pending Acquisition consideration

 

$

$463

 

 

 

$855

Class A Common Private Placement

 

Repayment of certain project-level debt

 

 

$68

 

 

 

$958

Pending Acquisition consideration(4)

 

Estimated fees and expenses

 

 

$855

 

 

 

$162

     

 

     

Total sources

$2,437

 

Total uses

$2,437

 

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

Comments

Emerging Growth

Kiwa Bio-Tech Products Group Corp

Kiwa Bio-Tech Products Group Corp develops, manufactures, distributes and markets, cost-effective and environmentally safe bio-technological products for agriculture in China.

Private Markets

8tracks

Our mission is to be the best place for people who care about music to create and discover thoughtfully curated playlists. In essence, 8tracks is a platform for online mixtapes.

GoCoin

Blockchain currencies (e.g. Bitcoin) provide a new disruptive way to transfer value between parties over the internet as opposed to going through banks. GoCoin provides online merchants with a suite…