AIMCo bets on green with stake in renewables giant

AIMCo bets on green with stake in renewables giant
AIMCo purchased an eight-per-cent stake in energy giant TransAlta Renewables Nov. 26.Photo courtesy of Government of Alberta.

Days after the government announced sweeping climate change policy reforms, its arms-length fund manager bet big on green.

The Alberta Investment Management Corporation (AIMCo) announced Nov. 23 it had purchased an eight per cent stake in TransAlta Renewables, an Alberta-based clean power generation company, for $200 million.

The transaction making the crown corporation the second-largest shareholder in TransAlta Renewables closed Nov. 26. AIMCo is one of Canada’s largest and most diversified institutional investment managers with more than $85 billion of assets under management.

AIMCo’s investment in TransAlta Renewables provides its clients an opportunity to participate in an “attractive, internationally-diversified portfolio of contracted high quality, clean power generation assets with a long asset life and a favorable risk/return profile,” a press release read. The TransAlta Renewables assets are an “excellent complement” to AIMCo’s existing $4 billion of investments in utilities, energy and power, and transportation,” according to CEO Kevin Uebelein.

“AIMCo is very pleased to become an important investor in TransAlta Renewables,” he said. “TransAlta has set forth a bold transition plan that will see it become one of North America’s preeminent clean power companies (and) TransAlta Renewables is an important part of that strategy. AIMCo is looking forward to a strong working relationship with TransAlta Renewables.”

He said the company is also pleased to be adding to the $8 billion it has invested in Alberta. That represents about nine per cent of AIMCo’s assets under management.

“AIMCo has gained recognition globally as a major infrastructure investor,” senior vice president Ben Hawkins said. “This investment in TransAlta Renewables provides an attractive addition of a large diversified portfolio of infrastructure assets with stable long-term contracted cash flows for our clients.”

TransAlta Renewables owns 16 wind and 12 hydroelectric power generation facilities, and holds economic interests in TransAlta’s Wyoming Wind Farm and Australian assets, which has a total installed generating capacity of 1,856 MW.

TransAlta Renewables’ power generating capacity is among the largest of any publicly-traded renewable independent power producer (IPP) in Canada, with more wind power generating capacity than any other Canadian publicly-traded IPP.

Also on Nov. 23, TransAlta Corp., the parent company of TransAlta Renewables, announced it had invested $540 million in interests in renewable energy projects in Ontario and Quebec, namely TransAlta’s Sarnia Cogeneration Plant, Le Nordais wind farm and Ragged Chute hydro facility, consisting of about 611 MW of highly-contracted power generation assets located in those provinces.

“TransAlta Renewables will continue to be a key part of our strategy to strengthen our balance sheet, improve our liquidity, and position TransAlta and TransAlta Renewables for future growth opportunities,” TransAlta Corp. president and CEO Dawn Farrell said. “With the proceeds from the transactions announced today, together with the Australian transaction that was completed in May of this year, we will achieve our debt reduction target for the year by generating cash proceeds of approximately $575 million.”

Farrell said the company is “pleased to have AIMCo, a high performance investment manager with global experience, join us as a significant investor in TransAlta Renewables.”

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