Pattern Energy Poised To Grow On Strategic Initiatives
Zacks Investment Research | Jun 19, 2017 09:26PM ET
Renewable energy leader, Pattern Energy Group Inc. (NASDAQ:PEGI) recently announced a set of strategic initiatives that aim at improving long-term growth outlook as well as capital opportunities. Notably, independent power company – Pattern Development, private investment firm – Riverstone Holdings and pension investment manager – Public Sector Pension Investment Board (PSP Investments) will make notable contributions to Pattern Energy in achieving these strategies.
These initiatives will enable Pattern Energy to gain an increased share of the global renewable energy market worth $250 billion annually. The projects will also support Pattern Energy’s 2020 vision to increase portfolio to 5 gigawatts (GW) by 2020.
Highlights of the Projects
The projects include new capital commitments of $1 billion for Pattern Development 2.0, under which Pattern Energy will make minority investment of $60 million, with a right to fund an additional $240 million and approximately $724 million in long-term capital initiatives from institutional investors through a managed entity by Riverstone.
Pattern Development 2.0 will initially own development assets that are subject to Pattern Energy’s Right of First Offer (ROFO). This will focus on wind, solar, transmission and storage projects in the U.S., Canada and Mexico.
Under the aforementioned initiatives, a strategic co-investment relationship with PSP Investments will be established. In fact, PSP Investments will eventually become the largest shareholder in Pattern Energy by buying 10% (8.7 million shares) of Pattern Energy’s shares from Pattern Development 1.0.
PSP Investment will also co-invest $500 million in Pattern Energy’s projects under the company's ROFO with Pattern Development, along with investments in the Meikle, Mont Sainte-Marguerite and Panhandle 2 projects.
Acquisitions and Sale of a Minority Interest
In addition to the aforementioned initiatives, Pattern Energy will acquire a 51% interest for $65 million in the 179 MW Meikle project from Pattern Development 1.0. Further, the company will buy a 51% interest in the 143 MW Mont Sainte-Marguerite project from Pattern Development 1.0 for $40 million.
Moreover, Pattern Energy will sell 49% of the Class B interest in the 182 MW Panhandle 2 project to PSP Investments. This will result in a cash gain of $59 million for Pattern Energy.
Price Movement
In the last 12 months, Pattern Energy has outperformed the Zacks categorized Zacks Investment Research
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