Capital Dynamics sells US solar assets for $250m

The global private asset manager has agreed to sell the 39 solar projects to SunEdison’s yieldco TerraForm Power.

TerraForm Power, a unit of SunEdison that floated in July, has agreed to pay $250 million for a pool of solar energy assets in five US states from Capital Dynamics, the two companies said in separate statements.

Under the agreement, TerraForm Power will buy 39 solar power plants, or 77.6 megawatts in California, Massachusetts, New Jersey, New York and Pennsylvania through an increase of $275 million in its existing term loan facility, it said in a statement.

These assets are expected to provide TerraForm Power with a levered cash-on-cash return of around 9 percent while adding further geographic and cash flow diversification, its chief executive officer Carlos Domenech said in the statement.

SunEdison created TerraForm Power as a so-called “yield co”, a publicly traded company that is formed to own operating assets that produce a predictable cash flow.

Yield cos, similar to Master Limited Partnerships (MLPs), are expected to pay a major portion of their earnings in dividends;  a good source of funding for parent companies owning stakes.

It has become increasingly common for renewable energy companies to sell projects to their yield cos, using the proceeds to fund additional projects.

The transaction is expected to close in the fourth quarter of 2014, subject to regulatory approvals.

Barclays and JP Morgan acted as exclusive financial advisors to TerraForm Power.