Brookfield’s Bord Gais deal bittersweet in Dublin


March 31, 2014

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Brookfield Renewable has one of the largest publicly-traded pure play power portfolios in the Americas. It’s natural that it should look further afield.

As such, confirmation last week of the Canadian investment fund’s purchase of the 321MW portfolio of wind farms from Ireland’s Bord Gais comes as no surprise. It was selected as preferred bidder in December, and has been quick to use the opportunity to make its international expansion plans clear.

The sale is part of a wider €1.1bn privatisation plan that involves state-backed Bord Gais offloading the whole of it energy business to three firms: Centrica, Icon Infrastructure and, of course, Brookfield Renewable.

In Dublin, the sale is bittersweet.

The city has come under significant pressure from international lenders to sell state assets to pay down debt and fund a jobs stimulus plan, and 18 months ago it put public assets worth €3bn on the block. That’s quite the garage sale.

Against that backdrop, it’s no surprise to learn that the paperwork for all three parties has been finalised with the deal due to complete in the second quarter. That’s a relatively quick turnaround, even if it doesn’t feel like it.

That willingness by all parties to do things quickly is one indicator that this deal really matters.

For Centrica, which will take over the gas and electricity supply business as well as one gas-fired power planet, the deal is about old-fashioned growth. It is not able to increase existing margins in the UK market, and so this Irish opportunity is a smart play ahead of expected expansion into the US.

For Icon Infrastructure, the UK-based asset management firm that will buy Northern Irish gas supply and distribution business Firmus Energy, the deal adds further weight to its existing infrastructure investments. This means Icon can break into Northern Ireland; and the deal also represents a stable long-term investment opportunity in its increasingly diverse portfolio.

Which just leaves Brookfield Renewable — or, to use its full name, Brookfield Renewable Energy Partners.

The company has a strong track record in North American hydropower, with the profits to prove it, and an expansion of its existing onshore wind energy assets certainly makes sense. The firm has already stated that it expects to grow the portfolio by up to 500MW by 2015, raising its value to €700m.

This is a strong statement by Brookfield, and shows how North American institutional investors – including Brookfield’s Canadian counterpart Northland Power – are looking to Europe for stable returns and solid portfolio growth.

These firms may not benefit from the double-digit year-on-year European growth of bygone days, but that has never been their true motivator. They want a reliable investment and a foothold in the European market.

Understanding this motivation holds the key to success for European wind developers over the medium- to long-term.

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