NRG Plans $400M IPO for unit to own, operate power assets

NRG Energy Inc. (NRG) said a newly created unit, formed to operate renewable and conventional power assets and pay regular dividends to shareholders, plans to raise as much as $400 million in an initial share sale.

The unit, NRG Yield Inc., would own a mix of solar, wind and gas-fired generating assets and “pay a consistent and growing cash dividend,” it said today in a filing. The company intends to list its shares for trading on the New York Stock Exchange under the symbol NYLD. The number of shares to be offered and price weren’t disclosed.

NRG, the largest independent U.S. electricity generator, is expected to retain a majority voting interest in the unit and a similar economic interest in its assets, the Princeton, New Jersey-based company said today in a statement. NRG Yield expects to be “a premier company for investors seeking stable and growing dividend income from a diversified portfolio of lower-risk high-quality assets,” it said in the filing.

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NRG Yield owns three natural gas or dual-fired facilities, seven utility-scale solar power plants, one wind farm, and two portfolios of distributed solar energy systems, for a total of 1,324 megawatts of capacity. The assets sell electricity under long-term contracts with “credit-worthy counterparties,” according to the filing.

NRG Yield would use a portion of proceeds from the IPO to fund construction of its 250-megawatt California Valley Solar Ranch project that’s expected to be completed in October 2013, the company said.

Bank of America Corp., Goldman Sachs Group Inc. and Citigroup Inc. are managing the offering.

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