NEW YORK (The Deal) -- Sol-Wind Renewable Power, a New York-based MLP, announced on Wednesday that it had postponed its $100 million yieldco initial public offering. It appears as though the market did not have enough confidence in an unknown sponsor, said two industry sources. The management team was light on well-known industry names, which may have added to investors' apprehension, the sources said.
The industry sources contrasted Sol-Wind's situation with a successful public offering, that of NRG Energy (NRG - Get Report) , which took its yieldco, NRG Yield (NYLD) , public in July 2013. NRG Yield's dividend yield is 2.9%.
Another aspect that may have added to investor reluctance was that Sol-Wind is structured as a master limited partnership. Typically, a yieldco is owned by a corporation and not a partnership, making this an unusual situation, the first source noted. And, in Sol-Wind's case, the MLP feature wasn't seen as providing a tax benefit, adding to investor skepticism.
However, Sol-Wind's general partner, 40 North, a New York-based hedge fund, has "deep financial pockets" and likely will just wait for the market to get "frothy," then brush off its IPO papers and try again, the first source said. Sol-Wind declined to comment and calls to 40 North were not returned.
Speaking at Infocast's 7th Annual Projects & Money Conference in New Orleans last month, Andrew Redinger, utility, power and renewable energy group head at Keybanc Capital Markets (KEY - Get Report) , said the competition for assets has heated up. Pension funds and infrastructure funds have gotten a lot more aggressive and are competing with the yieldcos, which has caused spreads to tighten, he said.
Redinger also said that while forming a yieldco has become easier, "bigger is definitely better in the equity capital markets." He added that a company needs a strong pipeline of assets and geographic diversity to succeed.
If the IPO had come to fruition, Sol-Wind, formed in August 2014, had planned to acquire equity and debt interests in a 184.6 megawatt portfolio from its general partner. The portfolio includes solar and wind power generation assets in the U.S., Puerto Rico and Canada.
Sol-Wind originally filed an S-1 for its IPO in December, and had planned to list on the New York Stock Exchange under the symbol (SLWD) .
UBS (UBS - Get Report) and Citigroup (C - Get Report) were the underwriters for the IPO and the co-managers included Wells Fargo Securities (WFC - Get Report) , Credit Suisse (CS - Get Report) , Deutsche Bank Securities (DB - Get Report) , Macquarie Capital (MIC - Get Report) , Bonwick Capital, MFR Securities and Williams Capital Group.