Canadian pensions PSP and OTPP explore $6bn sale of renewable investor Cubico

The Canadian pension giants Public Sector Pension (PSP) Investment Board and the Ontario Teachers' Pension Plan (OTPP) are reportedly looking into the sale of their renewable joint-venture Cubico. 

OTPP and Montreal-based PSP plan to appoint a financial advisor in the "coming weeks" as they explore a deal that would value Cubico Sustainable Investments at around $6 billion, according to various media reports in North America.

A number of people familiar with the matter said Cubico's pension owners are aiming to find a buyer that agrees to value Cubico at about ten times its 2022 earnings before interest, deprecation, EBITDA and taxes. This was around $640 million last year.

In 2015, the two pension funds teamed up with Spanish banking giant Santander to set up Cubico. A year later they bought out Santander and formed a 50-50 joint venture that has run the renewable investment firm since.

The company currently owns and operates a range of wind and solar farms in over a dozen countries, mostly in the U.S., Europe and Brazil.

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Focus on renewables

OTPP, among the world's 20 largest pension funds with net assets of more than C$247 billion, has made a range of renewable investments in recent years, such as in U.S.-based NextEra Energy. 

Ziad Hindo, since 2018 the pension's chief investment officer, told Net Zero Investor recently that the energy transition has been made a top priority for the fund. 

"We have a plan to allocate around $5 billion to so-called high carbon transition assets, with a goal of using our capital and expertise to help select high emitting companies decarbonize faster," Hindo said.

He also said OTPP has created "a multi-asset class group called VERT [Virtual Energy and Renewables Team], devoted to understanding the energy transition and how we can best invest in it."

Meanwhile, PSP oversees roughly C$243.7 billion of assets, with interests in hydroelectric, wind and solar in Canada, the U.S., Europe and Asia. 

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