The Deal: NRG Yield to Price IPO

NRG Yield 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.
By The Deal ,

NEW YORK (

The Deal

) --

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

in February.

Bank of America Merrill Lynch

,

Goldman, Sachs & Co.

(GS) - Get Report

and

Citigroup Inc.

(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

Loading ...