* Shares rise as much as 28 percent
* Company valued at about $3 billion
* Company's IPO raises about $721 million (Adds details about yield-paying companies; stock move)
June 13 (Reuters) - Shares of Abengoa Yield Plc, a unit of Spanish renewable and engineering firm Abengoa SA , rose about 28 percent in their U.S. market debut, valuing the company at about $3 billion.
Abengoa Yield's IPO raised about $721 million after its upsized offering of 24.9 million shares was priced at $29 per share, well above the expected price range of $25-$27 per share.
Demand for shares in the IPO was $10 billion, more than 16 times what was on offer, said Manuel Sanchez Ortega, chief executive of parent company Abengoa.
Abengoa Yield's shares opened at $35.16 and rose to a high of $37 on the Nasdaq.
Abengoa Yield said in a filing that the company was created to manage and acquire renewable energy assets in the United States and South America.
Yield-paying firms, or yield cos, are expected to pay a major portion of their earnings in dividends, a valuable source of funding for their parent companies, which owns sizeable stakes.
The move to form yield cos is becoming popular mostly among solar firms seeking cheaper ways to finance their business. TerraForm Power, a unit that SunEdison Inc created to own and operate some of its solar power plants, filed for an IPO last month to raise up to $50 million.
Canadian Solar Inc and JinkoSolar Holding Co Ltd have also said that they are considering such a move.
Shares of NRG Yield Inc, which holds solar assets of power company NRG Energy Inc, have risen about 92 percent since going public in July.
Abengoa Yield, in which parent Abengoa owns a 71 percent stake, expects a payout ratio of 90 percent of its cash available for distribution and intends to pay a regular dividend from the third quarter ending Sept. 30.
Parent company Abengoa generates 30 percent of its revenue from the United States, compared with 18 percent from its home market.
Net proceeds from the offering would be distributed to the parent company, Abengoa Yield said.
Abengoa Yield's loss attributable to the combined group for the three months ended March 31 widened to $26.9 million from $4.9 million a year earlier. Revenue almost doubled to $63.8 million.
Citigroup and BofA Merrill Lynch were the lead underwriters for the offering. (Reporting by Avik Das in Bangalore; Editing by Maju Samuel)