September 17, 2021
Brookfield Renewable Partners L.P.
Investor Day Preview
Our View: We expect management to deliver a consistent message for growth (FFO/unit and distribution growth of 10%+ and 5-9%, respectively) at its upcoming Investor Day. We believe management will also highlight the broad range of energy transition and decarbonization investment opportunities, as Mark Carney (Vice Chair of Brookfield Asset Management and Head of Transition Investing) will also be presenting.
Key Points
Investor Day: September 21, at 11:00 AM (ET). Brookfield Asset Management (and other Brookfield entities) will be hosting its annual Investor Day on September 20 and 21 in New York (sessions will also be available virtually). Brookfield Renewable's presentation will begin at 11:00 AM (ET) on September 21, and run for ~70 minutes. Please click here to register. Some key messages and topics we expect management to highlight include:
Energy transition investment opportunities and the provision of decarbonization services. With the July 2021 initial $7 billion close of the Brookfield Global Transition Fund (focused on the global transition to a net- zero economy) and BEP's participation in the fund, we expect management to highlight the supportive backdrop to deploy capital and provide more colour on the global energy transition investment opportunities available, in addition to the role that BEP can play to help customers meet their decarbonization goals.
Deploying capital at attractive returns. Management has a strong track record of developing projects at attractive returns and finding multi-faceted M&A opportunities where BEP can leverage its in-house capabilities to drive value. In September 2020, management guided to deploying $800 million to $1 billion in BEP equity capital per year (up from the September 2019 guidance of $800 million per year). We expect management will continue to target an attractive return of 12-15% (levered after-tax equity return).
Maintaining strong growth profile. We expect management will continue to guide to a 10%+ FFO/unit annual growth profile over the next 5 years, which consists of 6-11% from organic growth and 4-5% from M&A. The growth profile is supportive of management's guidance of 5-9% annual distribution growth (we expect distribution growth will continue to be at the lower end of the range over the next several years).
Self-funding model. Management has previously highlighted that its funding plan does not require any common equity issuances (absent of large accretive acquisitions). BEP currently has $3.3 billion of available liquidity, and we believe it will continue to fund growth through a combination of project-level financing, preferred equity, corporate debt, and capital recycling.