Brookfield Renewable Partners (NYSE:BEP) Buys Duke Energy Unit; Stock Shows Promise
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Brookfield Renewable Partners (NYSE:BEP) Buys Duke Energy Unit; Stock Shows Promise

Story Highlights

As U.S. utilities seek to offload unregulated power assets outside of their home markets to focus on core territories, Duke Energy sells its commercial renewables unit to Brookfield Renewable Partners.

Brookfield Renewable Partners (NYSE:BEP), operator of pure-play renewable power platforms, acquired U.S.-based Duke Energy Renewables’ unregulated utility scale Commercial Renewables business for $1.05 billion in equity proceeds with approximately $265 million net to Brookfield. This purchase could bode well for BEP’s stock price.

The deal is expected to see closure by year-end 2023.

Progressive Addition for BEP

With Duke’s significant operating assets and a strong development pipeline, the transaction has highly attractive near-term synergies for BEP.

The transaction is seen generating strong going-in cash flows leading to almost 3% accretion to 2024 funds from operations (FFO). It would also provide Brookfield the opportunity to share platform costs with its existing businesses and nab high-value contracts for new developments leveraging existing buyer relationships.

Backing the Acquisition

Besides the $3.9 billion that Brookfield Renewable has closed on, or agreed to invest in, in the past 18 months, today it announced a bought deal ($150 million) and concurrent private placement ($500 million) raising a total of $650 million in total equity proceeds.

The offer is expected to close on or about June 16, 2023.

Is Brookfield Renewable Partners a Good Investment?

Of the six Wall Street Analysts covering the stock, the consensus rating stands at Moderate Buy with four analysts assigning a Buy rating and two giving it a Hold. The average price target stands at $34.91, implying a 10.4% upside potential.

Last week, Credit Suisse Analyst Andrew Kuske reaffirmed his Buy rating on the stock with a $40 price target, which marks a 26.5% upside potential.

Year-to-date, the stock has gained 25%;  BEP reported a strong first quarter with a 13% FFO growth year-over-year and signed transactions of $8 billion of equity investment alongside its institutional partners. BEP’s growth initiatives are seen supporting the company in its goal of achieving consistent double-digit annual FFO/unit growth. This is likely to act as a catalyst for rising stock prices.

Disclosure

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