TerraForm Power, an arm of the solar power company SunEdison that operates over 200 solar power projects in the Americas, said on Thursday that it had priced its initial public offering at $25 a share, the top end of an already raised price range.
That meant that TerraForm raised about $500 million from the offering, as well as $65 million from two additional private stock sales conducted at the I.P.O. price.
At the offering price, the solar power project company was valued at about $2.4 billion.
The I.P.O. of TerraForm was part of the so-far successful turnaround plan at SunEdison, which has rebounded from near disaster two years ago to become one of the top-performing solar power companies in the country. The creation of TerraForm was pushed heavily by Steve Tesoriere of Altai Capital, an activist hedge fund that SunEdison surprisingly welcomed into its boardroom.
TerraForm, which is known in industry parlance as a yieldco, is essentially the repository for its parent company’s solar projects. By going public, the yieldco can use the stock market to raise money to support its power initiatives at a significantly lower cost than what SunEdison could borrow from a bank.
Moreover, yieldcos pay out most of their earnings in the form of dividends, benefiting their parents and public shareholders with a consistent return.
Such entities have been welcomed by public investors. One of the first in the most recent batch, NRG Yield, has risen almost 85 percent since making its market debut last summer.
In light of that, underwriters this month raised the top end of TerraForm’s price range to $25 a share, from $21.
TerraForm is scheduled to begin trading on Friday on the Nasdaq stock market under the ticker symbol TERP. Its public offering was led by Goldman Sachs and Barclays.