Brookfield and La Caisse bet billions on Quebec’s undervalued clean power pipeline
A 32 percent bid premium is pulling Boralex Inc. off public markets as two of Canada’s biggest institutions move to scale up in renewables.
BNN Bloomberg reported that Brookfield Asset Management Ltd. and Caisse de dépôt et placement du Québec have struck a deal to take Quebec‑based Boralex private at an implied enterprise value of about $9bn, including project and corporate‑level debt.
According to the Financial Post, Boralex shareholders will receive $37.25 a share in cash, nearly a 32 percent premium to both the March 20 trading price and the prior Friday close before news of a possible deal emerged.
The Wall Street Journal said the equity component of the deal is about $3.8bn, or US$2.76bn.
Boralex’s board unanimously backed the transaction, saying it offers shareholders immediate liquidity and certainty of value and sets up the company for its next phase of growth as a private firm.
BNN Bloomberg noted that Boralex shares had previously peaked above $55 in early 2021 but were trading at less than half that level as of last week.
The Financial Post reported that analysts following the company believed public markets were not fully reflecting the value of Boralex’s assets and pipeline and had expected a bid of as much as $39 a share after the company confirmed a strategic review.
Before announcing the deal, Boralex said on Monday that it had formed a special committee to review and recommend strategic alternatives, according to the Wall Street Journal.
BNN Bloomberg reported that renewable power producers have seen valuations fall from earlier highs because of permitting and other headwinds, although the trend has started to reverse over the past year in part as investors factor in electricity demand from artificial intelligence.
In that context, Brookfield said the fundamentals for clean energy “continue to be very strong” and that it is adding more development capabilities in major strategic markets, as reported by the Financial Post.
Under the agreement, Brookfield and its institutional partners, including Brookfield Renewable Partners, will hold 70 percent of the resulting private company, while La Caisse will own 30 percent, BNN Bloomberg reported.
The Wall Street Journal said Caisse, already Boralex’s largest shareholder with roughly a 15 percent stake, will double its interest, while Brookfield’s flagship infrastructure strategy will acquire the remaining 70 percent of Boralex.
Operationally, Boralex brings about 3,800 megawatts of wind, solar, hydro and battery energy storage assets, with more than 90 percent of them contracted for an average term of 10 years, across Canada, France, the United States and the United Kingdom.
The Financial Post reported that installed capacity has increased by more than 50 percent over the past five years.
The development pipeline is also substantial.
Boralex has about 300 megawatts of projects under construction or ready to build and around 750 megawatts of secured projects.
With backing from Brookfield and Caisse, Boralex expects to accelerate about 1,600 megawatts of advanced-stage projects and a further approximately 5,600 megawatts of mid- and early-stage projects in strategic markets.
For Brookfield, the acquisition will add about four gigawatts of operating projects to its existing global renewable portfolio of 46 gigawatts, plus roughly eight gigawatts in various stages of development across Canada, France, the US and the UK.
The Financial Post reported that Boralex president and chief executive Patrick Decostre called Brookfield and CDPQ “the right long-term partners for Boralex” as the company enters an accelerated growth phase that will require significant capital and flexibility.
He said the deal offers “significant economies of scale and opportunities, particularly in procurement, energy commercialization to large corporations and sharing of best practices within their different platforms.”
The transaction is subject to shareholder and regulatory approvals and other customary conditions and is expected to close by the fourth quarter of this year or by year-end.
When it closes, Boralex expects to be delisted from the Toronto Stock Exchange, but to keep its headquarters in Quebec.
National Bank Capital Markets and RBC Capital Markets are acting as financial advisers to Boralex, as per the Wall Street Journal.
