Spanish Abengoa’s yieldco IPO at Nasdaq could be of $1bn

The Solana 280-megawatt solar plant deployed by Abengoa in the Arizona desert could be within the new listed company along with some power transmission line concessions in Latin America, or even some Spanish wind farms. Asked by The Corner, Abengoa did not confirmed that piece of news nor the transaction’s value either. The company only communicated the sending of a relevant fact to CNMV’s Spanish authority regulator announcing it confidentially submitted a Form F-1 for registration to the SEC with the proposed initial public offering of the common stock of a yieldco vehicle. The IPO is expected to start after the SEC completes its review process, subject to market and other conditions.

In opinion of Ahorro Corporación’ analysts in Madrid “ the operation could amount about $1 billion since it suits perfectly with the company’s strategy to continue reducing the debt load it contracted in the years preceding Spain’s 2008 housing market crash.” They also add that “its corporate net debt ratio stood at 2.2x in 2013 against 3.7 previously, with a foreseen reduction of 2 lower by year 2014.” Experts at Sabadell agree that “Abengoa’s strategy regarding rotation of risks assets considered the creation of yieldco vehicle. The impact on  debt reduction will depend on the fnal valuation of assets, but $1 billion would mean a cut of -9% by 2014.”

As energy plants have long-term distribution agreements the cash flow they produce is considered to be stable and predictable, and then can be distributed among investors. Assets in Solana will give predictable revenues since it has sold all the power it will produce for the next 30 years to Arizona Public Service.