(Bloomberg) — Innergex Renewable Energy Inc. surged after pension manager Caisse de Depot et Placement du Quebec agreed to buy the Canada-based power company in an all-cash deal that values it at about C$10 billion ($7 billion) including debt.
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Innergex investors will receive C$13.75 per share, a 58% premium to Monday’s close, the companies said Tuesday in a statement. At that price, the company’s equity is worth about C$2.8 billion. Innergex shares rose as much as 55% on Tuesday.
Quebec-based Innergex operates hydroelectric facilities, wind farms, solar farms and energy storage facilities in Canada, the US, France and Chile. The firm has interests in 90 facilities with an aggregate installed capacity of more than 3,700 megawatts, and 17 projects under development.
Even as some generalist investors sour on renewables, pension funds and insurers with long-dated liabilities remain interested in safe, contracted returns that operating wind and solar farms offer.
CDPQ’s head of infrastructure, Emmanuel Jaclot, said in an interview that Innergex holds medium-term contracts of 14 years. “Many are indexed to inflation,” he said. “So this is a cash flow base that will be stable over time.”
The pension fund will seek to syndicate as much as 20% of its capital investment with other shareholders.
Investments in Renewables
Quebec’s government-owned power utility, Hydro-Quebec, owns about 20% of Innergex and supports the transaction, despite losing near C$80 million on its investments made since 2020, according to data compiled by Bloomberg. CDPQ is already the second-largest holder. The buyout is expected to close in the fourth quarter.
“Although, the transaction is not yet finalized, there should be an opportunity for another bidder to approach Innergex over a 65-day go-shop period,” Rupert Merer, a National Bank of Canada analyst, said in a note to clients. “The transaction comes just shy of our C$16/share price target.”
CDPQ has a history of investments in renewable energy projects around the world. It’s one of biggest investors, along with Blackstone Inc., in the US giant Invenergy LLC with a 44% stake as of the end of 2023.
The pension plan is also the largest shareholder in Innergex rival Boralex Inc., according to data compiled by Bloomberg. Boralex shares soared as much as 8.4% in trading Tuesday. The company is “an independent company with an independent board,” said Jaclot. “We will continue to support them, and there’s room for lots of players.”
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