IPO Boom Grows in Renewables as Dividend Yield Beat Bonds

Friday 02 August 2013

Wind and solar companies are tapping the stock market for cash at the fastest pace in two years, led by three initial public offerings in London luring investors with dividends that beat returns on government bonds.
Clean-energy companies raised $3.8 billion in IPOs in the second-quarter, double the pace of the first three months of the year, according to data compiled by Bloomberg. The Renewables Infrastructure Group Ltd. (TRIG) raised 300 million pounds ($460 million) and began trading July 29. Its intention, to pay a 6 percent yield, compares with a 2.31 percent yield on the U.K. government’s 10-year gilt.
The offering was the biggest of three London IPOs this year by renewable companies taking advantage of investors’ thirst for income as the Bank of England keeps interest rates at record lows. Surging share prices have revived stocks as a source of funds, allowing companies that traditionally rely on banks and private equity to tap deeper pools of capital at lower costs.
“There’s really nothing out there that has more predictable cash flows than a solar farm contracted by an investment-grade utility,” said Brandon Blossman, an analyst at Tudor, Pickering, Holt & Co. in Houston. “Everybody likes a yield vehicle that has growth potential.”

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