Daniel Sinaiko Speaks to Windpower Monthly on SunEdison/First Wind Deal
Akin Gump global project finance partner Daniel Sinaiko is quoted in the Windpower Monthly article “Analysis: SunEdison’s $2.4 billion deal for First Wind,” discussing a transaction between the two companies that was announced last month.
Sinaiko said SunEdison’s proposed acquisition of First Wind “makes a lot of sense” with SunEdison buying “a first-tier developer with a 8GW-plus pipeline of operating projects and near-term and long-term development assets, which is not something you are going to find easily in the market.”
Whether First Wind can bring its late-stage projects to fruition will be a big factor in determining if the price of the deal was worth it, according to the article. Sinaiko said if the projects are not developed successfully, he doesn’t know “whether it would turn out to be such a great deal for anybody. The cost of the operating assets if the development pipeline is a bust is going to be pretty high.”
Sinaiko observed that the deal reflects the growing dominance of yieldcos in the M&A market, with a lower cost of capital squeezing out other potential buyers such as utilities. He said he also thinks the lower cost of capital “has created demand for one-off projects,” followed by portfolios of projects, and now “for the acquisition of an entire business that includes operating and development assets.”
While the SunEdison/First Wind transaction has garnered a lot of attention because of its size, Sinaiko said it is “probably feeding some irrational exuberance on the part of smaller-scale developers.” If he were a developer with a smaller pipeline or less-established business, however, Sinaiko said this might not necessarily translate into a better market for his assets. There was, he points out, “a lot of value here that other developers are not going to be able to bring to the table.”
Finally, Sinaiko said he thinks U.S.-based developers will increasingly look toward international expansion as they confront policy and market uncertainty. This, the article points out, is something SunEdison and First Wind both emphasized as a possibility.