Pattern Energy Group Inc. (PEGI)

193 posts in this topic

Thanks for the writeup odyd--although what I read did not convince me to invest in any yieldco at this point.  Maybe I will take another look a couple days after fed raises rates...

I was not suggesting, one I feel strong is NEP, but it acts as a leaf in storm anyway. I would not recommend PEGI as I have unresolved questions about it myself.

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I think I begin to understand investment in developer for PEGI,

I quote from M Garland during cc:
"The economics are simple. We can acquire projects at a lower cost in the range of a 6x to 8x cash available for distribution multiple for a development project compared to market price of 10x to 13x cash available for distribution multiple. In essence, it is that two to four turns uptick in CAFD multiple that we would be acquiring by making an investment in Pattern Development."

PEGI wants to buy an investment in a developer like the three parties did in Jinko a few years back. By doing so, they will be buying projects without the gross margin on their investment portion, and pay margin only to percentile own by the developer.

When I looked at the Armow's total value at $325M, with the cash cost being $133M, the dynamic above makes it go down to $82M. I can imagine that Armow was 25% gross margin. With the developer contributing some $51M or 21% equity and rest being a debt of $192M. In this case, the 15% in 25% margin would be eliminated, it does not sound like minority interest, but I guess that would be a concept and so its the math.


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