In this News Flash: Brookfield plans to invest $30B in Australia. As Phil Totaro explains, Brookfield’s partnerships with Envision may bring wind turbine manufacturing to Australia. Pearce Renewables is acquiring Natron Resources which adds engineering services for solar PV and energy storage systems to the Pearce offerings. Cubico is being proffered by the UK’s Public Sector Pension Investment Board and the Ontario Teachers’ Pension Plan for $6B. Joel Saxum provides insight in Cubico’s EBITA multiple and what could lie ahead.
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News Flash August 21
Allen Hall: I’m Allen Hall and I’m here with Joel Saxum and Phil Totaro. And this is your News Flash. Canadian funds management giant Brookfield plans to invest $30 billion in new renewables and storage assets in Australia. Brookfield aims to take control of Australia’s largest energy, utility, Origin Energy, and invest heavily in new renewables and storage projects.
The $18.7 billion offer for Origin Energy has been accepted by the board and awaits regulatory approval. Now, Phil, there’s a lot. About this acquisition and, and all this transfer of funds that is under the surface. You wanna explain what’s actually happening here?
Phil Totaro: Yes. So this is a really exciting and fascinating deal.
So it’s opening up a door into the Australian market for Invision Energy, which they’ve never been active in, in that market, certainly in the power generation side of their, their business before. But now that Invision has, you know, a well-established wind turbine manufacturing capability, a well-established battery storage and ev battery manufacturing capability, and they’re investigating all kinds of power to x type of applications like hydrogen and green ammonia production.
This fits very well. With a company like Brookfield that’s looking for, for that type of technology to, to exploit. And a market that, you know, as, as we’ve talked about on, on the show before Australia’s definitely interested in, in trying to cultivate a market for some of these power to X applications like hydrogen and green ammonia for export purposes.
So this is all told this package is a very impressive very impressive deal.
Joel Saxum: Yeah. One thing not to miss here is Brookfield staying true to what their business strategy is. Origin that they’re buying for that 18.7 billion has a large liquid natural gas business. They’re gonna spin that off.
They’re gonna sell it over to us-based, EIG. While Brookfield is gonna continue on with the utility business and they plan to build 12 gigawatts of new wind, solar, and storage projects by 2030 in Australia. So that’s, that’s big time for the country of Australia.
Allen Hall: Pearce Renewables division of Pearce Services has acquired Natron Resources, a leading provider of design and engineering services for solar PV and energy storage systems.
Natron resources headquartered. The San Francisco Bay Area offers comprehensive electrical, civil and structural engineering services for renewable energy and commercial customers. So Pearce is growing again. Joel?
Joel Saxum: Yeah. Pearce. I mean, we talked with them at ACP. They were great. Great group of guys.
Over 2,800 employees over there. So this is gonna broaden their scope into being able to do more design work, right? So when you do a solar utility scale solar installation, there’s five stages of it. There’s the design. There’s the civil work, which includes, you know, bulldozing and whatnot. And then there’s pile driving, the mechanical installation and the electrical installation.
We know that Pearce with their large group of people does a couple of different sectors of this, but now they’re on the engineering side, so that gets them in at that early stage value in large solar projects. So it can only start to grow the back end of their offerings as well.
Phil Totaro: This constitutes the sixth acquisition that they’ve made dating back to April of 2020, including Max Gen Energy Services, World Wind and Solar, Mountain Renewables, A&A Wind Pros and MFG Energy Services. So they just have been on an absolute acquisition spree, gobbling up everybody that they can to help facilitate both services and EPC support.
Allen Hall:Â Cubico Sustainable Investments, a UK renewables investor is being considered for sale by the UK’s Public Sector Pension Investment Board, and Ontario’s teacher’s pension plan.
They reportedly are seeking an advisor for a potential auction that could value the business around $6 billion, including debt. Obviously, Cubico specializes in investing in owning and operating renewable energy projects, including onshore wind, solar photovoltaic. Solar thermal and transmission and distribution line technologies.
Phil, this is a huge deal.
Phil Totaro: It is. And for a company that has assets all over the place, they, they’ve got investments throughout Europe including the UK and, and continental Europe, and investments in the Americas including Brazil the United States, et cetera. So this gives somebody that probably already has a very robust portfolio, an opportunity to expand something that brings a lot of quality to the table because most of the Cubico project sites operate extremely well and extremely profitably as well.
Joel Saxum: Yeah. One of the things to watch here is, okay, we’re looking at a $6 billion possible valuation, 2.8 gigawatts of installed capacity with 770 megawatts in construction. Now, the number I want to focus on here is, $641 million in EBITDA from 2022, and they’re looking for a 10 times multiplier that around that $6 billion.
So whenever you look at large scale movement in sectors, right, whether it’s the financial sector or it’s, now we’re looking at renewable sector. That EBITDA that EBITDA multiplier is kind of where you get to see where the larger markets are focusing. The large ca capital investment, so a 10 times EBITDA.
That’s pretty high, right? You don’t get much higher than that sometimes for some tech stuff you might see a 12 or a 15 or something really cutting edge that has blown up, like unicorn status. You might see a 17 or 18 times EBITDA multiplier for the value of the company, but it’s pretty rare. 10 times is pretty high.
So that could set the bar for some of these larger investments going. I know we saw the, you know, the in energy in AEP and. You know, the Duke sale and a lot of other, other things. So this could be a trend to watch, see what kind of EBITDA multipliers these large asset portfolio sales are going at.
Allen Hall:Â To learn more about mergers, acquisitions, and partnerships in wind energy, check out IntelStor at intelstor.com.
