BlackRock has agreed to put $500 million into Recurrent Energy, the project development arm of Canadian Solar, in return for a fifth of the company. Four days earlier, Mitsubishi HC Capital agreed to buy a fifth of European Energy, a Danish developer whose pipeline is more than twice as large. The two deals look like twins. Priced per megawatt, they are not.
Key takeaways
- BlackRock agreed on 23 January 2024 to acquire a 20 percent stake in Recurrent Energy, a subsidiary of Canadian Solar, through a $500 million preferred equity investment convertible into common equity, made by a fund managed by its Climate Infrastructure business.
- Enerdatics calculates the enterprise value of BlackRock's 20 percent stake in Recurrent Energy at $704.42 million, based on the $500 million investment and Recurrent's net debt of about $1.02 billion on a 100 percent basis as of 30 September 2023.
- Grossed up to 100 percent, the Enerdatics valuation implies an enterprise value of about $3.52 billion for Recurrent Energy, or roughly $0.14 million per MW across the 25,960 MW solar pipeline attached to the deal.
- At the time of the BlackRock deal, Recurrent Energy's solar pipeline of about 26 GWp comprised 1.16 GWp in construction, 5.28 GWp in backlog and 18.7 GWp in advanced and early-stage development, alongside 847 MWp of operating solar plants.
- The European Commission approved BlackRock's investment in Recurrent Energy on 13 March 2024, and the initial closing was finalised on 3 June 2024, according to Leap.
What exactly is BlackRock buying?
A convertible claim on a fifth of a developer that wants to stop selling most of what it builds. Preferred equity is a class of shares that ranks ahead of ordinary shares for payouts. This instrument can be converted into ordinary shares, and the 20 percent is measured on that basis: fully diluted, as if the conversion had already happened.
Canadian Solar keeps the majority. BlackRock comes in as a minority partner beside a listed parent, which is a different position from buying control of a platform outright.
The perimeter matters too. The transaction spans 15 countries, from the US, Canada and the UK to Brazil, Australia, South Korea and Taiwan. It excludes Canadian Solar's project development business in Japan and China, as well as certain assets in Latin America and Taiwan. BlackRock is buying into Recurrent as defined for this deal, not into every development team that carries the Canadian Solar name.
Why does Recurrent want a long-term partner now?
Because it is changing how it makes money. For most of its history Recurrent followed a develop-to-sell model: originate a project, take it through permits and financing, then sell it. The company has originated, developed, financed and built about 9 GWp of solar and 3 GWh of battery storage since 2009 on that basis.
The revised model keeps more. Recurrent wants an operating portfolio in growth markets with stable currencies, project sales in the rest of the world to fund that growth, and long-term operations and maintenance contracts, with 8 GW of contracted projects already under such agreements. The stated aim of the BlackRock investment is to support the move from developer to long-term owner and operator in markets such as the US and Europe.
Owning assets ties up equity that a seller would recycle. Recurrent's target is 4 GW of solar and 2 GWh of storage operating in the US and Europe by 2026. Against 847 MWp of operating solar at the time of the deal, that is a large balance sheet to fill, and BlackRock's $500 million goes straight into it.
Selling has not stopped. It has moved. Recurrent still disposes of projects where holding them does not fit the plan, as its later sale of the Hessay solar project in the UK shows.
How should the $704 million be read per megawatt?
Only after it has been grossed up. The structured deal value in Leap, $704.42 million, is the enterprise value of the 20 percent stake, not of the company. Enerdatics builds it from two pieces: the $500 million paid for the equity, plus 20 percent of the roughly $1.02 billion of net debt. Divided by the full 25,960 MW pipeline, that stake value shows as about $0.03 million per MW, which is the figure Leap's raw per-MW field displays.
Comparing a 20 percent price against 100 percent of the capacity understates the price fivefold. Scaled to the whole company, the same arithmetic gives an enterprise value of about $3.52 billion and an implied equity value of $2.5 billion. Per MW of solar pipeline, that is roughly $0.14 million.
Even grossed up, the figure is low next to the prices paid for operating plants, because most of the megawatts are early. Only 1.16 GWp was in construction and 847 MWp operating. The 18.7 GWp in advanced and early-stage development carries the most risk of never being built. A per-MW figure on a pipeline this young is a measure of how much optionality a buyer is paying for, not of what a built plant is worth.
Earnings give a second reading. Recurrent reported about $518 million of revenue for the 12 months to 30 September 2023. On the grossed-up enterprise value, that is roughly 6.8 times revenue.
Enerdatics records 39 corporate solar transactions worth $300 million or more announced in 2023 and 2024. Recurrent's 25,960 MW is the sixth-largest capacity attached to any of them, behind European Energy, Pine Gate Renewables, DESRI, BrightNight and Neoen. The closest comparison is Mitsubishi HC Capital's 20 percent stake in European Energy, announced on 19 January 2024, which Enerdatics values at $1.01 billion on the same stake-level method. Grossed up, that is about $5.05 billion across the 62,000 MW attached to the deal, or roughly $0.08 million per MW. On that basis, BlackRock paid about two thirds more per MW of pipeline for Recurrent than Mitsubishi HC Capital paid for European Energy in the same week.
What does the deal signal for developer platforms?
It signals that infrastructure funds are willing to finance a developer's switch to ownership without taking control. BlackRock gets a convertible, preferred position in a company with a listed parent and a global footprint. Canadian Solar keeps the majority and the strategic direction. Recurrent gets equity to hold assets it would previously have sold.
It also shows how far apart two superficially similar deals can be. Both were 20 percent stakes in developers with very large pipelines, announced four days apart, and both are valued by Enerdatics on an enterprise value basis. The two pipelines differ in size, mix and maturity, and Recurrent brings an operating business and an O&M book alongside its development. The record does not say what drove BlackRock's price, so the gap is best read as a difference between two platforms rather than as a market rate.
Finally, it is a reminder that per-MW figures for platform deals need care. Leap's raw field for this deal reads $0.03 million per MW. The grossed-up figure is about five times higher, and it still describes a pipeline rather than steel in the ground.
Frequently asked questions
How much is BlackRock investing in Recurrent Energy?BlackRock committed a $500 million preferred equity investment, convertible into common equity, for 20 percent of Recurrent Energy's fully diluted shares on an as-converted basis. Enerdatics calculates the enterprise value of the stake at $704.42 million.
Does Canadian Solar still control Recurrent Energy?Yes. Canadian Solar continues to own the remaining majority of Recurrent Energy after the BlackRock investment.
Who advised on the deal?BofA Securities and Banco Santander acted as financial advisors to Canadian Solar. Leap lists Simpson Thacher as BlackRock's advisor.
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