Canada’s Brookfield Renewable Partners on Monday offered to buy out all the shares of yieldco TerraForm Power that it does not already own, potentially adding further heft to what is already one of the world’s largest clean-energy generators.
Brookfield Renewable — backed by Canadian alternative-asset giant Brookfield Asset Management — is already the majority owner of New York-based TerraForm Power. It acquired a 51 percent stake in 2017 in the wake of SunEdison’s bankruptcy and has increased its stake since then.
Brookfield also bought out SunEdison’s second yieldco, TerraForm Global. But while it eventually delisted those shares, TerraForm Power has continued to trade publicly with a large minority of its shares held by other investors.
Brookfield Renewable has now bid to buy up those outstanding shares for $17.31 apiece in an all-share deal, offering the equivalent of an 11 percent premium to TerraForm Power’s closing price on Friday. Shares of TerraForm Power rose more than 10 percent on Monday morning, to around $17.20, giving it a market capitalization of $3.91 billion.
The deal would further build on the trend of U.S. renewables operators being taken private or absorbed by larger investors — many of them institutional in nature, many of them Canadian. In November Pattern Energy, one of North America’s leading wind farm owners, agreed to be acquired by the Canada Pension Plan Investment Board.
Other yieldcos to have been taken private amid disappointing levels of interest from public-market investors in recent years include NRG Yield (now part of Clearway Energy) and 8point3 Energy Partners, the joint venture of First Solar and SunPower that’s now part of Capital Dynamics.
Brookfield claims an 18-gigawatt base of renewable energy and storage assets globally, skewing toward hydropower and with a large portfolio in South America.
While the majority of TerraForm Power's own 4 gigawatts of capacity is North American wind, the company has pushed into distributed generation in recent years, including a deal for more than 300 megawatts of behind-the-meter solar last year.
Rather than continuing to operate Brookfield Renewable and TerraForm Power separately, it makes sense to move to a “simplified corporate structure,” Brookfield Renewable Partners CEO Sachin Shah said in a statement.
Brookfield said the deal would strengthen its position as “one of the largest publicly traded, globally diversified, multi-technology, pure-play renewable power platforms” in the world, with $50 billion in total power assets.
In a statement of its own, TerraForm Power confirmed the unsolicited proposal from Brookfield Renewable and said it has formed a special committee of independent directors to review the offer.