Wind turbines in the region of Montérégie, Que. Brookfield and La Caisse said they would acquire Montreal-based Boralex on Tuesday, sending shares of the renewable power producer higher.Christinne Muschi/The Canadian Press
Brookfield Asset Management Ltd. BAM-T and the Caisse de dépôt et placement du Québec have teamed up to buy Boralex Inc. for $3.8-billion, the latest in a series of renewable power acquisitions by deep-pocketed fund managers.
On Wednesday, Montreal-based Boralex announced it had accepted an offer to take the company private after its board concluded the two institutional investors were the best sources of capital for its $6.8-billion, five-year expansion plan.
“Two patient investors like Brookfield and the Caisse have the long-term view and expertise in our sector that offered the best way to realize our strategic goals,” Boralex chief executive officer Patrick Decostre said in an interview.
Brookfield owns a global renewable power business with 7,000 facilities and assets of US$143-billion. Mr. Decostre said being owned by the Toronto-based asset manager will give Boralex reliable access to capital, better prices on equipment and its first access to data centre owners such as Microsoft Corp. and Amazon.com Inc., which are major consumers of power.
Brookfield and the Caisse are offering $37.25 a share for Boralex, a 32-per-cent premium to its share price prior to media reports this week the company was up for sale. With debt included, the takeover is valued at $9-billion.
The Caisse is already a significant shareholder in Boralex, with a 15-per-cent stake.
On Monday, Boralex disclosed its board was running a strategic review that could lead to the sale of the company. The news prompted a rally in Boralex’s share price and analysts estimated the company could sell for up to $4-billion.
If Boralex shareholders approve the offer, Brookfield will own 70 per cent of the company and the Montreal-based Caisse will own the remaining 30 per cent.
“We are excited to partner with La Caisse to accelerate the delivery of Boralex’s development pipeline in its next phase of growth,” said Jehangir Vevaina, global chief investment officer for energy at Brookfield.
Brookfield has more than US$1-trillion in total assets under management, while the Caisse oversees $517-billion on behalf of a number of Quebec institutions.
On Wednesday, Boralex’s share price jumped 11 per cent to close at $36.62 on news of the potential transaction. The takeover is expected to close by the end of 2026 and requires regulatory and shareholder approval.
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The Caisse has committed to voting its 15-per-cent stake in Boralex in favour of the takeover, which makes a rival bid unlikely. Boralex’s board has agreed not to seek another offer for the company.
“We view the transaction as a highly probable event given the backing of Boralex’s largest shareholder,” Bank of Nova Scotia analyst Robert Hope said in a report.
“This transaction highlights that private markets continue to highly value renewable assets, especially those with development pipelines,” Mr. Hope said.
Boralex has a number of publicly listed Canadian peers and Mr. Hope said the takeover “has positive valuation read throughs for Northland Power, TransAlta and to a lesser extent Capital Power.”
Boralex has agreed to pay a $115-million termination fee to Brookfield and the Caisse if it does accept a superior offer. The two fund managers will pay Boralex a reverse termination fee of $172-million in certain circumstances if the takeover fails to close.
Boralex builds and runs renewable energy projects in Canada, France, Britain and the United States. They include wind and solar farms, as well as battery energy storage systems. Mr. Decostre said with Brookfield and the Caisse’s backing, the company will accelerate growth plans in Ontario and Quebec.
The company is aiming to add seven gigawatts of capacity by 2030, and has an 8.2 gigawatt pipeline of wind, solar and battery storage projects in development or construction.
That would add to its current installed capacity of nearly 3.8 megawatts, which is up more than 50 per cent over the past five years.
Last year, the Caisse acquired one of Boralex’s rivals, Innergex Renewable Energy Inc., in a deal worth $10-billion including assumed debt. Pension plans and other institutional investors are acquiring renewable power producers because they value the predictable cash that flows from long-term contracts with dependable customers such as utilities.
Earlier this month, a consortium made up of Global Infrastructure Partners and EQT agreed to buy U.S. power company AES Corp. for US$33.4-billion, including debt, in one of the largest acquisitions ever seen in the sector.
Stock market valuations for renewable energy companies have come down since the Innergex deal was struck last year, as the industry has faced political and supply chain headwinds.
Boralex and its renewable power peers have faced stock market headwinds since U.S. President Donald Trump won re-election and began cancelling permits for wind farms and endorsing coal and natural-gas-fired plants. Governments in many European and Asian countries continue to back renewable projects.
Editor’s note: A previous version of this article incorrectly stated that Caisse de dépôt et placement du Québec oversees $517-million. Its net assets total $517-billion.