Are YieldCos a long-term viable source of capital for the renewable sector?
In 2009, Riverstone Holdings, a private equity firm focused on investments in the energy and power sectors, acquired a portfolio of North American wind farms, forming Pattern Energy Group. In 2013, Riverstone placed Pattern’s portfolio of completed and nearly completed operating assets into a “YieldCo,” a portfolio of contracted power infrastructure assets structured as an independent public company with a large percentage of its earnings paid out to investors in the form of a dividend. Pattern’s share price performed well through the summer of 2015, when the entire YieldCo sector experienced a severe downturn. This case explores the background of the YieldCo sector in general and the structure of Pattern in particular and asks students to consider whether investors will regain their appetite for YieldCos as a long term investment in the renewable sector.
Case ID: 160308