An IPO is good news


October 4, 2013

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Doomsayers be damned.

The US government may well have partially closed last week. Congress may well have failed to agree a new budget and the country may well risk running out of cash.

But the financial markets kept on moving. And for the team at Pattern Energy, that meant closing its initial public offering of 16,000,000 shares. Priced at $22 a share and raising $352m that was quite the coup, too.

More than that, though. It was also a US wind developer first. And, with share prices pushed up 10% on the first day of public trading, it values the California-based firm at roughly $1.24bn.

Undoubtedly this fresh wave of confidence is supported and driven by what is an already strong and well-diversified operating portfolio. Reinforced by a smart business model, to boot.

Currently the independent power company operates eight wind farms that generate revenue in the US, Canada and Chile and it has awareness of a further pipeline of acquisition of projects under development and in the wings.

That pipeline is continuing to be built out by Pattern Energy Group LP, a development team of 32 and the power company’s primary shareholder. Further detail that will of course bring a fresh wave of confidence to investors as the portfolio continues to diversify outside of the US, develop and grow.

And that international diversification is critical.

Particularly given the on running saga associated with the Production Tax Credit (PTC) – where US industry associations are working hard to avoid a potential expiry on 31st December.

However, while many within the domestic US market may view the pursuit of emerging markets such as Chile as a curious and uneasy paradox. For the power producers looking for strong and stable future shareholder returns, it’s a critical step.

That’s not to say of course that the US wind energy market can easily be dismissed – particularly since the threat of tax changes has created a short term construction and development blip.

However, it is perhaps another key milestone in the evolution of core western energy markets. And, as the latest in a string of international wind power IPO’s demonstrate, it’s a timely reminder of the future finance and investment potential that the North American markets need to really tap into and inspire.

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