What happened
The stock of Brookfield Renewable (BEP 1.13%) (BEPC +0.00%) dropped one day after the operator of renewable energy generation platforms said it was making a big acquisition in the space. Shares of both Brookfield's partnership units (BEP) and common stock (BEPC) were down by 5.6% as of 12:55 p.m. ET.
So what
Brookfield, along with its institutional partners, agreed to purchase Duke Energy's (DUK +0.97%) commercial renewables business for about $1.05 billion in equity proceeds, or about $2.8 billion, including the assumption of debt and other interests.
Today, the price of Brookfield Renewable's limited partnership (LP) units and shares both dropped after the details behind $650 million in equity offerings to help fund the purchase were announced. The pricing of the offerings was the reason why.
NYSE: BEP
Key Data Points
Now what
Equities will be offered at a discount of 4% from yesterday's closing prices to raise the funds, leading to today's price drops. Additionally, a subsidiary of Brookfield Reinsurance Ltd. will contribute $150 million of the capital raise for shares of the LP at a further discounted price of $29.14 per unit.
The transaction for Duke's assets is expected to close by the end of the year and will add 5,900 megawatts (MW) of existing and future wind, utility-scale solar, and storage assets, as well as a 6,100 MW development pipeline.
The acquisition adds to approximately 31,600 MW of Brookfield's installed capacity and will be immediately accretive to 2024 funds from operations (FFO), according to the company. Long-term investors should like the deal that quickly adds to more than 130,000 MW of renewable power assets in Brookfield's development pipeline.
But investors today are reacting to the relative discounts in pricing for the additional equity being sold. That could be an opportunity for those looking to add an experienced operator of renewable assets to a longer-term portfolio.
