Look for much bigger acquisitions soon from Brookfield Asset Management in the power sector.
The company's plan to combine its renewable power assets with those from Brookfield Renewable Power Fund to create a new entity, Brookfield Renewable Energy Partners L.P creates a much bigger acquirer.
The much bigger BREP will be able to ramp up the pace of purchases, taking out whole renewable power companies rather than the single asset purchases that Brookfield Renewable Power Fund tended to make. Rather than one wind farm or a single dam, the idea is that the larger BREP is of a scale that can take out an entire company.
How big will BREP be? It will have $13-billion of assets.
The company will have 262-million shares outstanding, according to Brookfield. It will pay a distribution of $1.35 a year. Based on a 5 per cent yield, that implies a share price in the $27 range, providing a market cap of $7-billion. That compares to the current Brookfield Renewable, which has a market cap of about $2.5-billion and a yield of 5.6 per cent.