We initiated a position in Terraform Global, Inc. (GLBL, Financial) upon its IPO. TerraForm Global is a globally diversified dividend growth-oriented company formed to own and operate contracted clean power generation assets in attractive high-growth emerging markets. The company’s parent is SunEdison, the world’s largest renewable energy developer, and TerraForm Global’s purpose is to acquire assets that produce high-quality long-term contracted cash flows from SunEdison and other third parties. As a “yieldco”, TerraForm Global’s high dividend payout ratio and long-term contracted cash flows enable a lower cost of capital than its developer parent, and that differential allows the funding of future growth at accretive levels. The market for renewable energy is huge and growing rapidly, with $2.1 trillion of investment needed between 2015 and 2020, of which 35% is in TerraForm Global’s addressable market. Solar and wind energy capacity additions are expected to have a compounded annual growth rate of 32% and 14%, respectively, within its target markets. (Rebecca Ellin)
From Baron Funds' Baron Partners Fund shareholder letter for Q3 2015.
