Sunrun Inc., the largest U.S. residential-solar company, is seeking about $500 million to fund more rooftop-power systems, according to people familiar with the company’s plans.
South African bank Investec Plc is leading the five-year deal, according to the people, who declined to comment because they weren’t authorized to speak publicly. The funds would refinance and expand an existing credit facility and represent the company’s biggest non-recourse debt financing deal to date. Sunrun declined to comment Thursday.
Sunrun has emerged in recent months as the biggest U.S. residential solar installer, surpassing Tesla Inc., which acquired market leader SolarCity in 2016 for $2 billion. It’s one of the few large rooftop solar companies growing in a period of market contraction, and said this week that installations would increase 15 percent in 2018. That would be the same pace as last year, when it added 323 megawatts of panels.
“Based on the increasing acceptance of the residential-solar asset class and overall strong market conditions, we see opportunity to reduce our capital costs in 2018, both on new and existing debt transactions,” Edward Fenster, chairman of the San Francisco-based company, said during the company’s fourth-quarter earnings call Tuesday.
Sunrun is pursuing the deal at a favorable time. Project-finance lenders are awash in capital, and like contracted renewable-energy deals.
Financing may be available at rates 50 basis points to 100 basis points lower than its average deal from last year, Fenster said on the call.
“They need to grow it as their size grows,” Sophie Karp, a New York-based analyst with Guggenheim, said in an interview.