The Safest Alternative Energy Yieldco
If you're a regular reader of these pages, you know I'm bullish on alternative energy yieldcos.
In fact, I've covered Pattern Energy Group (NASDAQ:PEGI) and NRG Yield (NYSE:NYLD) at length.
The way I see it, yieldcos are the next big alternative energy investments for retail investors. They enable regular investors to buy into multiple alternative energy assets that produce steady cash flow. For those not particularly keen on risk, but still want exposure to the burgeoning alternative energy space, this is a great way to do it.
The bottom line is that the alternative energy market continues to grow rapidly. Even those who are loyal oil & gas investors must admit that the growth potential in the alternative energy space – particularly solar and wind – is absolutely astounding. And this is not a trend that will peter out any time soon.
In fact, according to Bloomberg's New Energy Finance, 70 percent of new power generation capacity added between 2012 and 20130 will be from alternative energy technologies. This is huge.
Point is, there is no reason for you to not have at least a small portion of your portfolio dedicated to the alternative energy space. So you might want to take a look at the latest alternative energy yieldco to go public.
Strong Debut for Abengoa Yield
The company is Abengoa Yield (NASDAQ:ABY). This is a unit that was formed to serve as the primary vehicle through which Abengoa, the Spanish energy behemoth, will own, manage and acquire renewable energy assets. Conventional power and transmission assets are also included in the yieldco.
The IPO surged nearly 30% on its debut. Initially priced at $29 a share, it's now trading around $39. Of course, it's only been a week, and certainly the initial enthusiasm of the offering likely pushed the price up. But overall, I actually like ABY.
Abengoa is actually one of the strongest alternative energy players in the world. It has first-mover advantage in certain areas, and has well-diversified coverage across the globe with revenue-generating assets in North America, South America and Europe.
Currently, ABY owns 11 total assets which include 710 megawatts of renewables, 300 megawatts of conventional generation and 1,018 miles of transmission.
I didn't jump in early on the IPO, but will be looking to pick some up on a shake-out. The lockup doesn't end until December 10, too. So that should allow for some wiggle room throughout the summer and fall.
Of all the alternative energy yieldcos trading publicly right now, I foresee the most safety with ABY.