NEW YORK (
NRG Yield Inc.
, the spinoff from Princeton, N.J., power generator
NRG Energy Inc.
(NRG - Get Report)
, is expected to price its initial public offering at the high end of its $19 to $21 per share range with the 15% shoe option exercised,
Tudor Pickering Holt & Co. Securities Inc.
wrote in a report Tuesday, July 16. At $21 per share, the implied dividend yield for 2015 is expected to be 7%, or $94 million in distributed cash, the firm said.
The company, whose ticker symbol is expected to be NYLD, is targeted to increase its dividend by 10% to 15% over next five years through NRG Energy asset dropdowns. Compared with the average master limited partnership, NRG Yield has a higher yield, more growth and safer cash flows, with an implied enterprise value-to-Ebitda multiple of 10 versus 8 for NRG.
NRG already is adding to list of assets to capture multiple arbitrage by acquiring a 26-megawatt Guam solar project from
Quantum Utility Generation LLC
, TPH said. NRG Yield expects to sell up to 19.6 million shares, which could bring in as much as $411 million. NRG announced the IPO in June after filing confidentially with the
Securities and Exchange Commission
Bank of America Merrill Lynch
Goldman, Sachs & Co.
(GS - Get Report)
(C - Get Report)
are the lead underwriters.
Kirkland & Ellis LLP
is counseling NRG Yield, while
Latham & Watkins LLP
is representing the underwriters.
Written by Claire Poole