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Report: Sunrun seeking $500M to fuel home solar expansion

Sunrun Inc., which recently surpassed Tesla Inc. as the largest U.S. home solar installer, is seeking roughly $500 million in its largest nonrecourse debt financing deal to date, according to media reports. Sunrun executives had discussed their intention to raise new capital in 2018 during a March 6 earnings call with investment analysts.

"Based on the increasing acceptance of the residential solar asset class and overall strong market conditions, we see opportunity to reduce our capital cost in 2018 both on new and existing debt transactions," Edward Fenster, the company's co-founder and executive chairman, said during the call.

Citing "spreads that are 50 to 100 basis points lower" than Sunrun's average 2017 transactions, Fenster pointed to attractive debt and cash equity deals. "I don't want to make specific projections of the exact transactions that we're going to undertake in 2018, but we have many degrees of freedoms and good opportunities ahead of us."

Bloomberg first disclosed the developing transaction, reportedly led by London-based bank Investec PLC, citing unnamed sources. A Sunrun spokeswoman on March 9 declined to confirm the reported five-year deal.

Some investment analysts have expected Sunrun to borrow more to fuel its growth in both home solar and storage. "We continue to believe many investors do not understand the incremental borrowing capacity that [Sunrun] has on fully depreciated assets," Oppenheimer analyst Colin Rusch said in a March 7 note to clients. The analyst expects Sunrun to "demonstrate that capacity by early 2019, generating incremental cash flow."