Brookfield Renewable Partners Non Voting Units BEP

RBC

[retiredcf]

May 5, 2023

Brookfield Renewable Partners L.P. 
Q1/23 results and conference call highlights

NYSE: BEP | USD 31.47 | Not Rated | Price Target USD NA

Sentiment: Not Rated

Event

BEP reported Q1/23 results that were modestly higher than consensus expectations, and provided a number of updates that include committing to invest over $1 billion of capital (net to BEP) in Q1/23 (compares to its annualized average target of $1.2-1.4 billion per year), and advanced or completed capital recycling initiatives that would generate ~$1.5 billion of net proceeds to BEP.

Details

• Q1/23 results were above expectations. Brookfield Renewable's Q1/23 FFO/unit of $0.43 was above consensus of $0.41. Proportionate generation was 3% above the long-term average (hydro was 14% above average, partially offset by wind and utility-scale solar that were 16% and 15% below average, respectively). The company reported $32 million (~$0.05 per share) of other income during the quarter, some of which are related to gains from the company's capital recycling initiatives.

• Active start to the year for deploying capital. In Q1/23, the company signed transactions for almost $8 billon (over $1 billion net to BEP) of equity investments, which includes the previously announced Origin Energy transaction ($750 million BEP investment) that management expects to close in Q1/24. Brookfield Renewable was active in India, entering into an agreement with Avaada (India-based renewable energy developer and operator) to provide a structured U.S. Dollar financing solution that provides BEP with debt-like downside protection, and equity-like upside ($80 million net investment for BEP, with the option to invest an additional $120 million). In addition, the company agreed to acquire a 55% stake in CleanMax (India-based renewable energy developer and operator) for $360 million ($72 million net to BEP). Management expects the investments in India to generate mid-to-high teens returns from a U.S. Dollar perspective.

• Acquiring the remaining 50% interest in X-Elio. During the quarter, BEP along with its institutional partners agreed to acquire the remaining 50% interest of X-Elio (global solar development platform based in Spain) for $900 million ($75 million net to BEP). Brookfield acquired the initial 50% stake in 2019 for roughly $500 million. Management estimates that the initial investment generated an IRR of almost 30%, and the acquisition price for the remaining 50% will generate a mid-to-high teen return.

• Management expects ~$1.5 billion of proceeds from asset recycling in 2023. Brookfield Renewable currently has ~$4 billion of available liquidity, and the company has completed or advanced asset recycling initiatives which will contribute ~$1.5 billion to BEP in 2023 ($200 million realized in Q1/23) when completed. Management indicated that they are seeing very robust demand for high quality de-risked wind and solar assets, and the asset sales planned for this year are primarily wind and solar facilities in North and South America.

• Seeing more investment opportunities in operating assets and public companies. Management indicated that over the past few years, the company has made a number of investments which typically included operating assets with a development pipeline that would improve investment returns. While management expects investments of this nature to continue, they are beginning to see a shift in the opportunity set with operating assets and public companies (public to private transactions) looking attractive again from a valuation perspective.