Brookfield Asset Management is selling high, and looking to buy low.
On the high side, Brookfield Asset is reducing its stake in a subsidiary whose stock is on a roll, selling $300-million of shares of Brookfield Renewable Energy Partners. On the low side, it's on the hunt for assets in Europe, where the added cash will come in handy.
The real estate and infrastructure investment company is raising $300-million by selling 11 million shares of Brookfield Renewable Energy Partners . The deal cuts Brookfield Asset Management's stake in Brookfield Renewable by 5 percentage points to 68 per cent.
The official line is that the deal will help increase liquidity and diversify the investor base for Brookfield Renewable. And it undoubtedly will. However, realistically, liquidity wasn't that bad at an average of close to 237,000 shares a day on the TSX.
Brookfield Asset is peeling out the stake in Brookfield Renewable at close to the fund's 52-week high.
Brookfield Asset's cash hoard will increase by about 18 per cent after it takes in the proceeds of the sale. As of the end of the third quarter, Brookfield Asset listed cash and financial assets of $1.7-billion (U.S.).
Look for the money to head across the Atlantic. On the company's last quarterly conference call, chief executive officer Bruce Flatt said Brookfield expects "to find opportunities to acquire international assets from European companies which are endeavoring to deleverage their balance sheets, and we're working with a number of excellent companies to assist them in this regard."
Scotia Capital Inc. and TD Securities Inc. are leading the bought deal transaction.