Brookfield renewable fund raising up to $131m

The renewable energy investor will use proceeds to repay debt as it looks to invest up to $500m a year, mostly in hydro.

Brookfield Renewable Energy Partners (BREP) has agreed to raise up to C$175 million ($131 million; €124 million) via the sale of preferred stock units.

The series 7 preferred units will be issued at a price of C$25 per unit with gross proceeds equaling C$125 million. Up to 48 hours before the expected closing on 25 November, underwriters can purchase up to 2 million additional series 7 units, increasing the offering size to C$175 million.

TD Securities, CIBC, RBC Capital Markets, and Scotiabank are underwriting the issuance, which is only available in Canada. Brookfield said the stock will be used for corporate purposes and to repay debt.

The new series 7 stock will pay a cumulative quarterly fixed yield of 5.5 percent until 31 January, 2021. After that, the distribution will reset every five years at a rate equal to the 5-year Canadian government bond yield plus an additional 4.47 up to a maximum of 5.5 percent.

Under certain conditions, series 7 stockholders can reclassify their units into cumulative floating rate series 8 units after the 31 January, 2021 period and every 5 years afterwards. Series 8 holders will receive a cumulative quarterly floating distribution rate equal to the 90-day Canadian Treasury bill yield plus an additional 4.47 percent.

In a recent results call, BREP said it will continue to prioritise hydroelectric power and look for new markets as it invests around $500 million a year for the next five years. The firm posted quarterly results that show hydro and wind assets performing under the long-term average, but chief executive Sachin Shah said this was normal for the third quarter. He added he remains confident in BREP’s ability to deliver 12 to 15 percent returns.

This article was first published on Low Carbon Energy Investor, Infrastructure Investor's sister publication covering global energy transition markets.