WORKERS CAPITAL
Exclusive-Canadian pension funds explore $6 billion sale of renewables firm Cubico -sources
KEEPING THEIR HYDROCARBON INVESTMENTS

Thu, August 10, 2023
By Isla Binnie and Andres Gonzalez

NEW YORK (Reuters) - Two of Canada's biggest pension funds are exploring options including a sale of Cubico Sustainable Investments that could value the renewable energy firm at about $6 billion or more, including debt, according to people familiar with the matter.

Montreal-based Public Sector Pension (PSP) Investment Board and the Ontario Teachers' Pension Plan (OTPP) are looking to appoint a financial advisor in the coming weeks, the sources said, adding the sale could take several months to complete.

The sources, who requested anonymity as the matter is confidential, cautioned a deal is not guaranteed and is subject to market conditions.

Cubico's owners are aiming for a valuation of about 10 times its earnings before interest, taxes, depreciation, and amortization (EBITDA) of $641 million in 2022, the sources said.

Ontario Teachers' and PSP declined to comment. Cubico did not immediately respond to requests for comment.

The potential sale of Cubico comes at a time when renewable power developers and other service providers focused on energy transition have become attractive acquisition targets for infrastructure investors and corporate utilities.

Ontario Teachers' currently manages net assets worth C$247.2 billion ($184.31 billion), while PSP oversees roughly C$243.7 billion of assets.

PSP has a portfolio of hydroelectric, wind and solar assets worth $1 billion in Canada, and has invested in offshore wind development in the United States, Europe and Asia.

Ontario Teachers' has invested alongside major U.S. utility NextEra Energy in the United States, and struck a deal to finance offshore wind development with Australia's Macquarie Group.

In 2015 the two funds partnered with Banco Santander SA to launch Cubico, and became equal owners after buying out the Spanish bank's stake the following year.

Cubico operates wind and solar farms in 12 countries in Europe and America, as well as concentrated solar power and transmission line technology operations with a capacity of 2.8 gigawatts (GW).

The company is also developing and constructing over 2.2 GW of additional capacity, according to its website.

($1 = 1.3412 Canadian dollars)

(Reporting by Isla Binnie in New York and Andres Gonzalez in London; Editing by Anirban Sen and Chris Reese)