SunEdison, Inc. (NYSE:SUNE) is one of the largest alternative energy developers (solar, wind, and hydro) in the world. TerraForm Global (as well as TerraForm Power which is owned in the Baron Global Advantage Fund) is a “yieldco” created and majority owned by SunEdison for the purpose of owning the operating assets and producing and distributing cash flows to shareholders. The “yieldcos” serve to lower the cost of capital, which, in turn, increases the value of the specific project assets. TerraForm Global’s projects will be located in emerging markets, including Brazil, China, India, and South Africa. Expected to go public sometime in July, this “yieldco” should provide a new stream of cash flow to Sun Edison in the form of dividends and incentive distributions for many years to come. We believe both companies represent unique and compelling growth opportunities in a segment that, in our view, is poised for significant growth.
From Baron Funds' second quarter 2015 commentary. Continue Reading »