Canadian Solar Submits Documents For Yieldco IPO

Canadian Solar has submitted documentation to the U.S. Securities and Exchange Commission for a proposed yieldco IPO. One advantage of a yieldco is the ability to pass untaxed earnings to investors. Net operating losses can help such a company to reduce its tax burden and sometimes to not owe taxes. Yieldcos are public companies owned by a parent company and provide dividends to shareholders when they are available.

Starting up a yieldco might seem like a questionable venture to some, because some of them have lagged. One example is TerraForm Power (TERP), which is owned by SunEdison. It has ranged over $40 per share, but is now down to about $12. Abengoa Yield has experienced somewhat of a similar slide.

Yieldcos have not been performing all that well lately, but that might be changing slightly, as “Yieldco stocks are starting to look up a bit over the last thirty days, which likely gave the management confidence that the worst days for Yieldco stocks might be behind us,”explained Mercom Capital CEO Raj Prabhu.

Canadian Solar is a global leader in solar power; 12 GW of solar modules have been deployed by the company in the last 14 years. The company makes products such as wafers, solar cells, and solar PV modules. Its stock has dropped to about $21 after peaking some time ago at $39.

Of course, the big question is what will happen soon with the federal investment tax credit in the US, and what impact that will have on the solar power industry there.

Image Credit: Canadian Solar