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Brookfield Renewable Announces Acquisition of Origin Energy

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Securities In This Article
Brookfield Renewable Corp Ordinary Shares - Class A (Sub Voting)
(BEPC)

We do not plan to materially change our fair value estimate for Brookfield Renewable BEP following the announcement that the company, along with an EIG consortium, has signed a binding agreement to acquire Australia-based Origin Energy. We view the shares of Brookfield Renewable as slightly undervalued at current levels.

Under the terms of the agreement, Brookfield Renewable will acquire Origin’s energy markets business while the EIG consortium will acquire Origin’s integrated gas segment. Origin’s energy markets segment consists of its power generation assets (roughly 6 gigawatts) and its energy retail operations (24% market share). Brookfield Renewable expects to invest as much as $750 million in the transaction, which will be funded through a mix of corporate debt, up-financing of existing hydro assets, and proceeds from asset sales.

We view this transaction as consistent with Brookfield’s strategy under its new line of Global Transition funds to acquire companies with more traditional generation sources and expand the portfolio with a buildout of renewables. We believe a key strategic rationale for the transaction was Origin’s large retail energy operations, which Brookfield can leverage for offtake for new renewable assets.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Brett Castelli

Equity Analyst
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Brett Castelli is an equity analyst, energy and utilities, for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. His coverage focuses on clean energy companies across renewables and emerging technologies.

Before joining Morningstar in 2021, Castelli spent more than eight years in various analyst roles for TortoiseEcofin, a boutique asset manager. His coverage focused on North America and included companies within traditional energy, electric utilities, and renewables. Additionally, he assisted with the firm's environmental, social, and governance efforts and played an important role in integrating ESG into the investment process. Castelli spent a year at the firm's London office following an acquisition.

Castelli holds a bachelor's degree in finance from the University of Missouri's Trulaske College of Business. He also holds the Chartered Financial Analyst® designation.

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