Trina to spin-off downstream business


At the World Economic Forum meeting in Dalian, China, Trina CFO, Teresa Tan said the company – the world’s largest solar PV module manufacturer – is interested in creating a separate financing platform, due to the strength of the downstream solar business. An IPO of a "growthco," is hoped for as early as next year. Where the company would be listed remained unclear, however.

"We see great potential return on downstream solar farms in the next 25 years, so we’d like to spin off this part of the business in order to have a separate platform for financing," Bloomberg quoted Tan as saying in an interview at the World Economic Forum. "The timing for such an IPO is maybe next year or the following year. We will try to speed up the process."

In contrast to a yieldco, which a number of U.S. solar companies, including SunEdison, and First Solar and SunPower, have recently adopted (others are in the planning, including by Canadian Solar and JinkoSolar), and where dividends are paid to investors through the sale of electricity, a growthco is focused on securing future assets.

According to Nick Duan, an analyst at Bloomberg New Energy Finance in Beijing, "Yieldcos are less practical for Chinese solar assets that are suffering from delays in subsidy payments and some idled capacity." Grid connection difficulties also play a role, he said.

"We will choose to spin off those downstream assets where we can seek reasonable valuation," Bloomberg reported Tan as saying. "Cash flow is of course still very important, but instead of paying out dividends the companies may use that cash to fund asset purchases to secure future growth."

Citing Trina’s debt of over US$1 billion (much of which is being channeled into new solar PV plant construction) and cash of $600 million as of June 30, 2015, Seeking Alpha, a news platform on stocks and investment, has aimed criticism at the plan, saying it has "overtones of desperation." "… demand for the IPO will be lukewarm at best and frosty at worst," states the article’s author, who also nodded to the problems solar projects tend to experience in China.

In its Q2 earnings, Trina said it plans to grid connect 700 to 750 MW of projects this year. Currently, it has 358 MW operational, comprising 300 MW in China , 18 MW in Europe and 4.2 MW in the U.S. (all utility-scale projects), and 36.3 MW of DG in China. Overall, 600 MW of projects are said to be under construction as of Q2 and 800 MW are at late stage development. Trina didn’t provide a location for the pipeline. Meanwhile, to date, the company has sold 123.8 MW of projects, 75.8 MW of which are located in the U.K. and 50 MW in China.

pv magazine has contacted Trina for further comment.

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