Infrastructure

Even NextEra Energy Wants In on Capital Raises

Jon C. Ogg

When the value of a stock keeps rising over time, it tends to look and feel good for just about everyone involved. That said, sometimes things have become so rewarding that some companies decide to raise capital after such strong gains. Utility companies may not be the primary targets for selling shares in secondary offerings, but NextEra Energy Inc. (NYSE: NEE) has been a beast of a utility stock, with a 52% gain over the trailing 12-months and with a 15% rise so far in 2020 alone.

NextEra Energy issued a press release after Tuesday’s closing bell stating that the utility giant plans to sell $2.5 billion of equity units in a capital raise. According to the company, each equity unit will be issued in a stated amount of $50 and will consist of one contract to purchase NextEra Energy common stock in the future and a 5% undivided beneficial ownership interest in a NextEra Energy Capital Holdings debenture due March 1, 2025 (with a face value of $1,000).

Also noted in the NextEra release is that the parent company will guarantee the debentures issued by NextEra Energy Capital Holdings. New holders are said to be required to complete their stock purchase no later than March 1, 2023, and the release indicated that such purchase obligations “may be satisfied with proceeds raised from remarketing the debentures that comprise part of their equity units.”

NextEra showed that the funds raised will be approximately $2.42 billion, after backing out any underwriting discounts and expenses related to the offering. The proceeds of the offering also will be added to the general funds of NextEra Energy Capital Holdings, and the unit intends to use its general funds to fund investments in energy and power projects and for other general corporate purposes. Those “general” purposes include repaying some or all the unit’s outstanding commercial paper obligations

While NextEra’s common shares have gone parabolic in recent years, NextEra has become the largest U.S. utility by far, and it was the first of the nation’s utilities to reach a $100 billion market capitalization.


Its current market capitalization was nearly $138 billion as of the $282.04 closing price seen on Tuesday. Some investors will take note that NextEra shares also were seen trading handily above the consensus analyst target price of $265.57 on last look.

NextEra shares were last seen down about 1.8% at $277.00, after having put in an all-time high of $283.34 earlier on Tuesday.