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Vivint Solar Announces First Of Its Kind Financing Vehicle
Written By: Jen Neville
August 14, 2018
Vivint Solar, Inc., a full-service residential solar provider, recently announced it closed an innovative multi-party forward flow funding arrangement that includes project-level debt, a levered tax equity partnership, and the company’s first cash equity investment. The transaction provides up to $327 million in total funding commitments, with an aggregate value of approximately $410 million, which is structured to generate upfront cash margin for the company for approximately 95 megawatts of future solar energy systems. This transaction is the first of its kind in the residential solar industry that incorporates a multi-party forward purchase commitment anchored by a levered tax equity partnership.
Bank of America Merrill Lynch acted in multiple roles in this transaction, including acting as sole structuring and placement agent for the cash equity and multi-draw term loan. Additionally, Bank of America Merrill Lynch acted as the sole tax equity investor. Hannon Armstrong is participating as the structured cash equity investor.
“This delivers another landmark financing transaction for the company in 2018, and we look forward to using this vehicle to continue to accelerate solar power adoption across the country,” stated Vivint Solar CEO David Bywater. “We are grateful for the continued support of Bank of America Merrill Lynch in this transaction and the faith and trust that investors continue to place in the future of our business. Hannon Armstrong’s programmatic investment is a key piece of the capital structure in this transaction.”
“The cash margin provided by this vehicle for a portion of our future PPA and lease assets is an important step to increase Vivint Solar’s financial flexibility and to solidify a sustainable funding model for the business,” said Vivint Solar’s Chief Commercial Officer and Head of Capital Markets, Thomas Plagemann. “We expect similar results to selling systems directly to homeowners, allowing us to continue focusing on providing the products best suited for each homeowner.”
Vivint Solar expects to raise approximately $3.37 per watt in upfront proceeds in addition to $0.41 per watt in retained value and renewal value. In addition, the company recently closed a $50 million tax equity partnership with a new investor. This multi-party forward flow funding arrangement, together with the undrawn committed capital under Vivint Solar’s other tax equity partnerships, is estimated to provide funding to install more than 170 megawatts of residential solar energy systems.
“Providing solutions that aid in the adoption of renewable energy is core to Bank of America Merrill Lynch’s environmental commitment. We value our relationship with Vivint Solar and Hannon Armstrong and look forward to continuing to grow the partnership,” added Omer Farooq, Managing Director in Bank of America Merrill Lynch’s Cross Asset Solutions and Strategies team.
“Hannon Armstrong is pleased to support Vivint Solar with capital to facilitate the continued expansion of their business,” noted Jeffrey Eckel, President & CEO of Hannon Armstrong.