(Bloomberg) -- Clearway Energy Inc. shares rose as much as 5.4% after the renewable developer sold its thermal energy business to KKR & Co. for $1.9 billion.
This divestment of Clearway Community Energy, which provides steam and hot and cold water to heat or cool buildings, “will eliminate any need to issue new equity to fund” its investment commitments, Chief Executive Officer Christopher Sotos said Monday in a statement. The unit has about 1,480 megawatts serving hospitals, universities and other buildings in California, Arizona, Minnesota, Nebraska and the U.S. Northeast.
The deal includes about $1.3 billion in cash proceeds. With that, Clearway may eliminate the need to raise debt for its Utah solar project and help with funding projects into 2023, said Colton Bean, an analyst with Tudor Pickering Holt & Co.
KKR paid an “impressive” enterprise valuation of about 27 to 29 times 2022 earnings before interest, taxes, depreciation and amortization in part because the business has high barriers to entry and can be scaled up, he said.
Clearway's stock was up 3.9% to $33.38 as of 11:32 a.m. trading in New York.
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