Dive Brief:
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Independent power company Invenergy on Thursday announced two new equity investments aimed at enhancing the company’s financial position and funding development activities.
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One of Canada’s largest pension funds, Caisse de dépôt et placement du Québec (CDPQ), is increasing its economic ownership in Invenergy Renewables from 32% to 52.4%. Invenergy will continue to be the managing member of the renewables company.
- Separately, Invenergy’s natural gas generation holding company, Invenergy Clean Power LLC, has entered into an equal partnership with global investment manager AMP Capital to invest in a portfolio of operating and development projects involving gas-fired power plants in the U.S., Canada and Mexico.
Dive Insight:
The overarching theme of both investments is "to strengthen our capital base," Jim Murphy, president and chief operating officer of Invenergy, told Utility Dive. He also said the proceeds of the investments would be used to reduce the company’s debt, which would be "accretive to the credit quality of the company."
The additional capital will help Invenergy pursue more projects. In addition, having CDPQ as a long-term investor lends the company more stability to pursue its long-term goals.
CDPQ’s investment builds on the pension fund’s existing stake in Invenergy Renewables, but it is not all new capital. The Canadian fund management firm is mostly buying out existing, and unnamed, Invenergy shareholders.
In 2013, CDPQ invested $500 million in Invenergy Wind LLC’s portfolio of 11 operating wind farms in the U.S. and Canada with an aggregate capacity of 1,500 MW. In 2014, CDPQ, which now manages more than $298 billion in assets, bought a direct stake in Invenergy Wind.
The financial details of the new investment were not disclosed, but overall, past and new actions included, CDPQ has now invested over C$1 billion ($779.98 million) with Invenergy, Rana Ghorayeb, senior vice president of investment and infrastructure at CDPQ, told Utility Dive.
Despite the fact that CDPQ’s investment gives it a majority stake in Invenergy Renewables, Invenergy will remain the managing member of Invenergy Renewables and will continue the day-to-day management of the business.
Moving up from stakes in operating projects to a stake in the development company gives CDPQ the opportunity to earn wider spreads associated with accepting the construction risk of a development project, Ghorayeb said. The key, according to her, is CDPQ’s confidence in Invenergy’s management and their ability to execute on project delivery.
From Invenergy’s point of view, CDPQ’s investment provides stability by consolidating its investor base. "We are long term investors and completely aligned with our partner’s interests," Ghorayeb said.
Invenergy has a portfolio of just over 13 GW of wind projects, 565 MW of solar projects, 94 MW of energy storage projects and 6,127 MW of gas-fired projects.
AMP Capital of Australia now will have a 50% stake in Invenergy’s gas-fired generation company.
AMP’s investment does not include stakes in Invenergy’s Energía del Pacífico gas plant project in Mexico or its Clear River Energy Center project in Rhode Island.
Murphy said AMP’s investment would provide Invenergy with additional capital to further its project development activities.
"The investment offers an excellent entry point into a highly attractive sector, due to the caliber of Invenergy, the quality and diversification of the portfolio, and the growth prospects of the development platform," Dylan Foo, partner and head of Americas infrastructure Equity at AMP Capital, said in a statement.