SolarCity announced Monday that it had partnered with Chicago-based underwriter and securities distributor Incapital to offer solar bonds to investors. The leading U.S. solar installer has stepped up efforts to raise capital from everyday investors. In October last year, the San Mateo-based company had launched a $200 million bond offering at interest rates as high as 5.45%.
SolarCity expands access for investors
The company’s October bond offering carried maturities ranging from one to seven years. But they were non-transferable if the holder wanted to cash out early. The new bond offering with Incapital will be transferable, with maturities ranging from one to 15 years. The deal will enable investors to purchase $100 million of solar bonds through a network of over 500 financial institutions.
Incapital managing director Jim Schaberg said the partnership offers investors a convenient way to buy and hold solar bonds in their existing brokerage accounts. The bonds will generate money to fund the continued expansion of SolarCity. The company’s business model requires significant upfront investment in solar equipment, technology and labor.
Last month, SolarCity received $300 million from Google to shoulder the upfront cost of solar panel installations for thousands of homeowners across the 16 U.S. states. In January, the company had received $200 million financing from Credit Suisse to support the growth of its MyPower program. The San Mateo-based company has also raised money through financial institutions like Wells Fargo and Bank of America.
SolarCity ramps of rooftop installations
SolarCity spokesman Jonathan Bass told Michael Perrault of Investors Business Daily that the company had created funds to finance over $5 billion in solar projects. The massive capital infusion has helped the residential solar installed ramp up rooftop installations before a 30% federal tax credit expires on December 31, 2016.
SolarCity added 21,318 customers during the fourth quarter of 2014. The company ended 2014 with 190,000 customers. SolarCity aims to have at least one million customers by 2018. Diversifying its investment sources to include retail investors will help SolarCity lower its cost of capital.