Silver Lake invests $100 million in SolarCity

SolarCity’s stock has had a rough month. Less than two months after Hedge Fund Manager Jim Chanos announced that he was shorting the company, SolarCity’s stock price fell sharply beginning on October 15, losing a third of its value over the next two weeks.

SolarCity’s Q3 results, released on October 29, didn’t help matters. Despite a shift in strategy to slower growth and towards becoming cash-flow positive, the company reported heavy losses and its stock fell further. Shares of SolarCity have been hovering in the US$25-28 range for the last week, down from a high of nearly $49 on October 9.

Today, SolarCity revealed that it is raising additional funds through a sale of convertible bonds to Silver Lake Kraftwerk and company officials. Silver Lake Kraftwerk has agreed to buy $100 million in notes, with Elon Musk buying $10 million and Lyndon Rive another $3 million.

These notes will not bear interest, but are convertible into common stock at a price of $33 per share, well above what SolarCity is currently trading at. The transaction is expected to close on December 7, 2015.

Silver Lake Kraftwerk Managing Director Josh Raffaelli identified SolarCity as a “highly attractive long-term investment opportunity”.

“We think the Company’s unparalleled access to solar-specific tax equity, asset backed security and debt clearly differentiates it from providers that are funding projects constantly via equity markets,” noted Raffaelli. “Distributed solar generation is an enormous opportunity and we believe there is no other company better positioned to take advantage of it.”

“One, it shows confidence,” Mercom Capital CEO Raj Prabhu told pv magazine. “On the flip side, Silverlake sees this as an opportunity where they could make some money.”