US rooftop solar company SolarCity Corp (NASDAQ:SCTY) has agreed a USD-113-million (EUR 106m) investment from private equity firm Silver Lake, chairman Elon Musk and CEO Lyndon Rive.
SolarCity announced the deal on Wednesday, saying that Silver Lake Kraftwerk will buy USD 100 million worth of zero-coupon convertible senior notes, while Musk and Rive invest USD 10 million and USD 3 million, respectively. The transactions are seen to close on or about December 7, 2015.
The private equity firm’s energy and resource innovation fund backed SolarCity in February 2012, before exiting in September 2013. The new investment, though, is almost four times the size of the initial one.
The notes that will be purchased by the investors will be convertible into SolarCity common stock at an initial rate of 30.303 shares per USD 1,000 principal amount of the notes, equalling a price of USD 33.00 apiece. They will mature in December 2020.
So far, SolarCity has been focusing on growing its business at a very high rate and, according to the company, it has installed more residential solar than its next 36 competitors combined in the second quarter of 2015 and more commercial solar than any other provider in the first half of the year. However, this growth strategy has kept the company in the red for almost every quarter since it listed in December 2012.
Late last month, while reporting a higher-than-expected quarterly loss, SolarCity said it is changing its strategy and will now concentrate on reducing costs and achieving positive cash flow by the end of 2016.
Josh Raffaelli, managing director at Silver Lake Kraftwerk, applauded this decision, saying that this is absolutely the right strategy. "We think the Company's unparalleled access to solar-specific tax equity, asset-backed security and debt clearly differentiates it from providers that are funding projects constantly via equity markets,” he added.