Pattern Energy in renewables JV with Cemex

The Riverstone-backed company aims to jointly develop 1GW of renewable power in Mexico with Cemex Energia within the next five years.

Pattern Energy Group LP (Pattern Development), backed by private equity firm Riverstone Holdings, has formed a joint venture with a subsidiary of Mexico’s building materials company Cemex to develop one gigawatt (GW) of renewable power generation in the Latin American country within the next five years, according to a statement.

“Mexico is a natural expansion market due to Pattern Development’s headquarters in Houston and its team’s experience in developing over 1,000 megawatts of wind projects in California, New Mexico and Texas,” said Mike Garland, president and chief executive of Pattern Development’s yieldco Pattern Energy (Pattern Energy Group). Pattern Development owns approximately 25 percent of the NASDAQ and Toronto-listed yieldco.

The Houston-based company referred to Mexico’s recent energy reforms, including a mandate for 35 percent of power generation to come from clean energy sources by 2024, as creating “significant opportunities for development of Mexico’s substantial wind and solar resources.”

In addition to expanding wind and solar project development in Mexico, the joint venture will grow the project pipeline for Pattern Energy, which has the right of first offer (ROFO) to acquire projects developed by its parent, Pattern Development.

Pattern Energy Group, which raised net proceeds of $319 million when it initially listed in September 2013, is a different sort of yieldco, as it was designed to become a fully-fledged project developer – and not just an owner of operational assets, as most yieldcos are – once its market capitalisation hits $2.5 billion, according to a report from law firm Chadbourne & Parke.

When that happens, the yieldco will inherit the workforce of its parent company. The yieldco also has an option to buy its parent company should its current owners decide to sell a significant portion of its equity or assets.

Last month, Pattern Energy acquired a majority stake in Japanese renewables firm Green Power Investment for an undisclosed amount. As part of the transaction, Pattern Energy will help fund up to 1,000MW of wind and solar projects in development.

Riverstone, an energy and power-focused private investment firm headquartered in New York, invested in Pattern Development in June 2009. It has not disclosed the ownership interest it holds in Pattern. A spokesperson for the firm did not respond to a request for comment.

Since being established in 2000, Riverstone has raised approximately $27 billion of equity capital and has committed approximately $29 billion to 115 investments in North America, Latin America, Europe, Africa and Asia.

The firm conducts buyout and growth capital investments in the exploration and production, midstream, oilfield services, power and renewable sectors.

Additional reporting by Bruno Alves.