Canadian Solar & Chinese Partners to Form Investment Fund - Analyst Blog

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Ontario, Canada-based solar product manufacturer Canadian Solar Inc. ( CSIQ ) announced that one of its wholly owned subsidiaries will team up with Sichuan Development Investment Management Ltd. (Sichuan Development) along with third party investors to form an investment fund, worth $800 million (RMB5 billion), in China.

Sichuan, China-based Sichuan Development is an investment management entity created and funded by the Sichuan provincial government's investment wing Sichuan Development (Holding) Ltd. With asset under management of more than $3.7 billion (RMB23 billion), Sichuan Development offers support for project development.

Per the plan, Canadian Solar and Sichuan Development will put in an equal amount initially while third party investors will likely contribute the rest to attain the targeted figure.

The fundraising primarily aims to promote construction, development and ownership of utility-scale and distributed generation solar power projects in Sichuan Province, China as well as other locations in the country.

Canadian Solar is well positioned with its diversified manufacturing base and project portfolio in Canada, China, Japan and the U.S. The company, like its U.S.-based peer SunPower Corporation ( SPWR ), is currently expanding its operations in Asia, primarily in China and Japan, encouraged by increasing solar uptake in these countries.

The company is currently in the middle of several ventures with contracted late-stage project pipeline of 290 megawatts (MW). In the third quarter of 2014, Canadian Solar plans to commence three projects, amounting to 80 MW (DC), in China and is currently exploring more options. At the end of the second quarter of 2014, the company had total module manufacturing capacity of 2.5 gigawatts (GW) in China.

To increase its current production capacity, in May 2014, Canadian Solar had inked a joint venture agreement with GCL-Poly Solar System Integration (China) Co., Ltd., a unit of GCL-Poly Energy Holdings Limited, to construct a plant to manufacture crystalline silicon solar cells in Funing, Jiangsu Province, China. This initiative will enable the company to meet increasing customer demand besides significantly reducing transportation costs.

Recently, the National Energy Administration of China has told local administrations to focus on distributed generation, reform and emphasize feed in tariffs, and offer added financial incentives as well as fast track connections. Canadian Solar's proposed investment fund will help to meet China's target of installing 8 gigawatts of distributed solar in 2014.

Canadian Solar currently holds a Zacks Rank #1 (Strong Buy). Other stocks in the same sector worth considering include ReneSola Ltd. ( SOL ) and Enphase Energy, Inc. ( ENPH ). ReneSola sports a Zacks Rank #1 (Strong Buy) while Enphase Energy carries a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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