Solar panel installer SolarCity Corp, which is being bought by Tesla Motors Inc for $2.6 billion, said on Monday it had raised $305 million to fund its projects.
A private investment fund affiliated with Quantum Strategic Partners Ltd provided the equity investment, the company said, reports Reuters. The fund was advised by Soros Fund Management LLC. The deal included an 18-year-loan syndicated to five institutional investors, SolarCity said.
The solar company said last month it faced greater-than-usual delays in closing new project financing commitments due to its takeover talks with Tesla.
A SolarCity vehicle is seen on the road in San Diego, California, U.S.
By placing the equity investor and lender group separately, SolarCity was able to achieve a pre-tax, weighted average cost of capital for the transaction of 7.4%, a significant improvement over its first cash equity transaction. The transaction and terms demonstrate the exceptional quality of SolarCity’s distributed solar assets.
The syndication of a long-dated, fully-amortizing loan is believed to represent a ‘first of its kind’ for distributed solar assets, creating another valuable financing tool for SolarCity. The loan was rated investment grade by a leading credit rating agency, and the financing is non-recourse to SolarCity. Bank of America Merrill Lynch acted as the sole syndication and structuring agent for the transaction.
SolarCity monetizes its underlying cash flows in cash equity transactions, but retains ownership of the assets and continues to service the customers. SolarCity held $5.2 billion in solar energy system assets on its balance sheet at the end of its most recently reported quarter on June 30.
Those assets are contracted to create $3.1 billion in future payments on a net present value (NPV) basis , and SolarCity expects to continue to execute additional transactions in the future with high-quality investors to monetize its contracted cash flows.
The portfolio of projects in the transaction announced today collectively represents 230 megawatts of solar generation capacity spread across 15 states. The vast majority of the installations were completed in 2015 and 2016.