Sources: Canadian funds pull out of $6 billion deal with renewables company Cubico

By Andres González and Isla Bienne

Three people with knowledge of the situation said that LONDON/NEWYORK on June 26th, two Canadian pension funds halted an auction they were running for renewable energy developer Cubico Sustainable Investments, which was valued at over $6 billion including debt.

Nearly two years ago, the Montreal-based Public Sector Pension Investment Board and Ontario Teachers' Pension Plan decided to investigate a possible sale of a company that operates solar and wind farms in Europe, North America, South America, and Australia. This was during a time when low-carbon companies enjoyed a period of increasing valuations.

Two people stated that the offers were not sufficient to convince the shareholders to accept a sale. One person and a second said that the process would not be restarted soon.

Two sources stated that some bidders valued Cubico around 5 billion euro ($5.9 billion), including debt. The sources said that ContourGlobal, a power producer owned by KKR and Qualitas energy, based in Spain, was also interested.

Cubico, PSP Qualitas ContourGlobal, and OTPP refused to comment. A representative for KKR had no immediate comment.

Investor interest in this sector, particularly in the United States has decreased, in part due to the rush to find more power sources - including those that are polluting - to meet the soaring demand for power for artificial intelligence and Donald Trump's continued backing of fossil fuels upon his return to the White House.

The owners expected that the sale would fetch around 10 times Cubico’s earnings in 2023 of $625,000,000 before interest, taxes, depreciation, and amortization, as reported earlier.

At least one corporate utility and financial firms were interested in the process. They bet that clean energy companies would gain more value as governments push to reduce emissions which cause global warming.

Bankers hoped that Trump's desire to relax regulations would lead to a boom in deals, but volatility on the market and geopolitical concerns are preventing some of this activity.

Cubico's total generation capacity is 2.8 gigawatts, including its transmission lines and concentrated solar power. The partnership was formed when Banco Santander partnered up with the two funds in 2015. In 2016, they bought the same shares as the Spanish bank.

(source: Reuters)