Key Takeaways
- Brookfield Renewable plans to invest up to $1 billion to increase its stake in Colombian hydroelectric company Isagen to approximately 38%.
- Qatar Investment Authority will also invest $500 million, raising its interest to about 15%, supporting the transition to a low-carbon future.
- The investment is expected to enhance Brookfield’s cash flows and reinforce its commitment to Colombia’s renewable energy sector.
Investment Expansion in Colombia’s Renewable Sector
Brookfield Renewable has unveiled plans to invest up to $1 billion to elevate its ownership in Isagen, a Colombian hydroelectric company, to about 38%. This substantial investment marks a significant step forward for Brookfield in South America’s renewable energy landscape.
The transaction is expected to finalize in the third quarter and will augment Brookfield’s presence in what it terms a “strategic portfolio of hydro assets”. These assets are designed to deliver stable and contracted cash flows. Isagen operates a vital array of hydroelectric facilities that contribute to the reliability of Colombia’s power grid. Moreover, Isagen is developing additional renewable power projects in response to the country’s escalating energy needs.
In a simultaneous move, the Qatar Investment Authority (QIA), which currently holds a stake in Isagen, will allocate approximately $500 million to increase its equity interest to about 15%. This investment aligns with QIA’s commitment to advancing the global shift towards sustainable energy solutions.
The deal represents a strong endorsement of Colombia’s renewable energy market and is projected to be immediately beneficial for Brookfield Renewable, anticipated to yield roughly 2% accretion to its funds from operations per unit by 2026. This expected growth is underpinned by substantial cash flow visibility, with nearly 70% of Isagen’s power generation contracted for an average duration of eight years.
Funding for the investment will come from a mix of non-recourse financing and available liquidity, reinforcing Brookfield’s dedication to both Colombia and the expansion of cash flows from its hydro portfolio. This portfolio is particularly valuable due to its scale, dispatchability, and baseload characteristics, which are increasingly sought after in the renewable energy arena.
Brookfield Renewable is recognized as one of the world’s largest publicly traded renewable power platforms, boasting a diverse portfolio of hydroelectric, wind, utility-scale solar, and storage facilities across various global regions. This strategic investment is set to further enhance Brookfield’s influence in the renewable energy sector and commitment to sustainability.
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