Canadian funds shelve $6 billion sale of renewables company Cubico, sources say

By Andres Gonzalez and Isla Binnie

LONDON/NEW YORK, June 26 - Two Canadian pension funds have halted a long-running auction for renewable energy developer Cubico Sustainable Investments that they had hoped could be valued at more than $6 billion, including debt, three people familiar with the matter said.

The Montreal-based Public Sector Pension Investment Board (PSP) and Ontario Teachers' Pension Plan (OTPP) decided to explore a sale of the company that operates wind and solar farms across Europe, North and South America and Australia, nearly two years ago, when low-carbon energy companies were enjoying a period of rising valuations.

However, the offers made were not enough to persuade the shareholders to agree to a sale, two of the people said. The process was not expected to restart imminently, one of the people and a third one said.

Some bidders valued Cubico at around 5 billion euros ($5.9 billion) including debt, two of the sources said. Spanish infrastructure fund Qualitas Energy and KKR-backed power producer ContourGlobal were among the parties interested, the people said.

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

Some investor interest in the sector has waned, especially in the United States, due in part to a rush for more power sources, including polluting ones, to meet soaring power demand for artificial intelligence projects, and Donald Trump's continued support for fossil fuels on his return to office.

The owners originally expected the sale to fetch a valuation, including debt, of around 10 times Cubico's 2023 earnings of $625 million before interest, tax, depreciation and amortisation, Reuters reported previously.

The process had attracted interest from at least one corporate utility as well as financial firms betting that clean power companies would become more valuable as governments pushed to reduce planet-warming emissions.

Bankers were hoping Trump's drive to loosen regulations would drive a deals boom, but market volatility and geopolitical concerns have hampered some activity so far.

Counting all its concentrated solar power and transmission line technology, Cubico has a total 2.8 gigawatts of generation capacity. It was formed in 2015 when the two funds partnered with Banco Santander. They bought equal shares of the Spanish bank's stake in 2016.

($1 = 0.8538 euros)