Sunday, May 4, 2014

NRG Energy Unit to Start IPO - Analyst Blog

NRG Energy, Inc. (NRG) has announced initial public offering (IPO) of the Class A common stock of its wholly-owned subsidiary NRG Yield, Inc. ("NRG Yield"). The company filed for this IPO with the Securities and Exchange Commission (SEC) on Jun 7, 2013.

NRG Energy priced the offering of 19,575,000 shares of the Class A common stock in the price band of $19.00 - $21.00 per share. The Class A common stock of NRG Yield will trade on the New York Stock Exchange under the symbol "NYLD."

NRG Energy will allow the underwriters of the issue a window of 30 days to purchase up to 2,936,250 shares of the Class A common stock of the initial public offering to cover over-allotments, if necessary.

NRG Yield intends to utilize the net proceeds of this offering to acquire a portion of the equity interest in NRG Yield LLC from NRG Energy and for general corporate purposes. Currently, NRG Energy's long-term debt-to-capitalization ratio is 58.8%, higher than the peer group average of 44.7%. Post offering, the company's long-term debt-to-capitalization ratio will decline.

NRG Yield is associated with renewable-energy business of NRG Energy. The company will subsequently own solar, natural gas and wind-fired generating assets.

We view NRG Energy as an organization with diversified electricity generation facilities in terms of geography, fuel type and dispatch levels. In addition, the company's strong liquidity profile helps it to pursue an organic and inorganic growth strategy, primarily to expand the solar asset portfolio.

NRG Energy currently has a Zacks Rank #2 (Buy). Other stocks in the industry that are worth considering include Companhia Paranaense de Energia (ELP), CPFL Energia S.A. (CPL) and Integrys Energy Group, Inc. (TEG), each with a Zacks Rank #1 (Strong Buy).

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