Good day and thank you for standing by. Welcome to the Brookfield Renewable’s First Quarter 2023 Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speakers' presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today, Connor Teskey, Chief Executive Officer. Please go ahead.

Thank you, operator. Good morning everyone and thank you for joining us for our first quarter 2023 conference call. Before we begin, we would like to remind you that a copy of our news release, investor supplement and letter to unitholders can be found on our website. We also want to remind you that we may make forward-looking statements on this call. These statements are subject to known and unknown risks and our future results may differ materially. For more information, you are encouraged to review our regulatory filings available on SEDAR, EDGAR and on our website. On today’s call, we will provide an update on our business and our recent development activities. Ignacio Paz-Ares, our Managing Director and Head of our European Investment Team will highlight some of our recent transactions. And then lastly, Wyatt will conclude the call by discussing our operating results and financial position. Following our prepared remarks, we look forward to taking your questions. We had an excellent start to the year with strong financial results, good progress advancing our development pipeline and success with respect to our growth initiatives. We generated funds from operations of $275 million or $0.43 per unit, a 13% increase from the same period last year, representing the progression to higher run rate earnings as our investments in new generation and various commercial initiatives come online. We also followed up on what was a very robust year for growth with a strong first quarter, signing transactions for almost $8 billion of equity investment alongside our institutional partners, or over $1 billion net to Brookfield Renewable. Together with prior transactions, these investments position us to achieve and likely outperform our $6 billion to $7 billion capital deployment target over the next five years. This includes our landmark transaction to acquire alongside…

Thank you Connor and good morning everyone. As Connor just mentioned, I will go through our most recent deal activity, which is mainly taking place in India and around X-Elio, apart from Origin, which was just corporate. But before we get into the details, it would be good to provide some background. And as most of you may know, the investment environment for renewables and decarbonization assets remains highly compelling. Themes like demand for clean energy from corporates, increasing focus on energy security, government supported electrification and decarbonization targets continue to be key trends supporting new investment. And with this backdrop, we have made significant progress growing our business globally over the last few months. Starting with India, we have executed two large scale transactions, tripling the size of our business in the country. First, we entered an agreement with Avaada, a leading renewable platform with over 11,000 megawatts of operating and development assets, to provide a structured U.S. dollar financing solution that gives us significant debt like downside protection as well as equity like upside. In addition to Avaada, we also agreed to acquire a 55% stake in CleanMax, another leading renewal platform, also based in India with 4.5 gigawatts of operating and development pipeline, and a plan to build over 2 gigawatts over the next five years. With these two acquisitions, our operating and development platform in the country will stand at approximately 21,000 megawatts. To provide some context around our growth strategy in India, similar to Brookfield's, broader approach to new geographies, we have now been on the ground in the country for more than five years on the renewable side and have gone through a strong learning curve by prudently making smaller scale investments. This has provided us with strong insights into the market dynamics, reaching…

Thank you, Ignacio. As Connor mentioned in his earlier remarks, we had a strong start to the year. Operating results reflect robust hydro generation across our portfolio, excuse me, strong year-over-year realized power pricing, high asset availability, and contributions from growth. We generated FFO of $275 million or $0.43 per unit, an increase of 13% compared to the same period last year. Our business continues to exhibit strong cash flow resiliency given the diversified asset base and the ability to capture higher power prices, both through inflation linked power purchase agreements, and a robust energy price environment for our hydro assets. Across our hydro fleet, reservoirs are generally at or above long-term averages, positioning the portfolio well for the remainder of the year. Our balance sheet is in excellent position and our available liquidity remains robust at almost $4 billion, providing significant flexibility to fund growth and be opportunistic in the current environment. We also remain protected from higher interest rates with 90% of our borrowings being project level non-recourse debt with an average remaining term of 12 years and only 3% exposure to floating rate debt. And while overall market liquidity may be challenged, lender appetite for high grade issuers, especially for those supporting renewables or decarbonization initiatives, remained strong as demonstrated by our recently completed issuance of CAD $400 million of 10 year corporate bonds, which were three times oversubscribed. We are also advancing non-recourse financing initiatives and our asset recycling programs, which will generate additional capital to fund our growth. We continue to see strong demand for renewable energy assets globally, and we are seeing strong interests across our capital recycling processes. In this regard, so far this year, we have generated over $300 million or almost $200 million net to Brookfield Renewable of proceeds from these, from our asset recycling program, returning more than double our invested capital. We are also advancing numerous capital recycling opportunities, which including deals signed year to date could generate up to $4 billion or approximately $1.5 billion net to Brookfield Renewable. In closing, we remain focused on delivering 12% to 15% long-term total returns for our investors. To do this, we will continue to be disciplined allocators of capital by leveraging our deep funding sources and operational capabilities to enhance value and de-risk our business. On behalf of the board and management, we thank all of our unit holders and shareholders for the ongoing support. We are excited about Brookfield Renewable's future and look forward to updating you on our progress throughout the year. That concludes our formal remarks for today's call. Thank you for joining us this morning, and with that, I'll pass it back to our operator for questions.

[Operator Instructions] Our first question comes from a line of Sean Stewart with TD Securities.

Thank you. Good morning everyone. A couple of questions. Let's start with India. Connor or Ignasio, you've talked a lot about that country as a growth target for a long time and we're encouraged to see you deploying capital more quickly now. Can you speak to how dynamics in that market have evolved to the point that you're more comfortable putting capital to work there, and can you give us an idea of where the returns in India compare to other markets you're targeting for growth?

Perfect. Thanks Sean. You're absolutely right, and Ignacio touched upon this a little bit. We entered the Indian market in 2017 and since entering the market five years ago, we've really enhanced and broadened our capabilities on the ground there and we've done a number of what we would call fairly modest bolt-on transactions. But to be clear, over the last five years, I would say we've reviewed almost every major transaction that's taken place in that market, and we've always just been very selective about finding opportunities that have the right value entry point and for a number of reasons, we're seeing an influx of those right now. And I do think that our expanded capabilities in the region and our ability to be a partner at scale to some of the growing platforms is really what is differentiating us at this point because in terms of what is really defining that market, it's two things. One, there are incredible renewable build out ambitions, and then secondly, where in other markets around the world we see our business driven primarily by corporates, historically, a lot of renewables in India have been sold through government auctions. And increasingly now in India, we're seeing more of a commercial and industrial contracting market develop, and that really plays to our strengths. And for example, that is where Clean CleanMax is one of the leaders in the Indian market and why we're so excited to be partnered with that platform. In terms of returns, we do look for a return premium given it is a growing and developing market. And we do take into account the cost of hedging the currency back to U.S. dollars, and therefore when we look in local currency returns, we're certainly targeting things probably closer to the high teens. And when that comes back to U.S. dollars, we're still kind of mid-to-high teens. Okay. Thanks for that detail. My second question is on the asset recycling program. It sounds like a lot of the initiatives are expected to close in the near-term. We have a sense of some of them like Shepherds Flat, but can you give us a sense of what the regional or technology focus is for [indiscernible] asset recycling? And you've touched on some really compelling returns for assets you've sold of late, but any target returns on those asset sales that are coming the next few quarters that you can give us some context on?

Certainly. So we'll answer that in two parts. I would say broadly, we have a fairly robust pipeline of asset recycling initiatives. At this point, it's comprised largely of wind and solar assets, and I would say this is probably coincidence more than anything else, but the regions where we're most active on the asset recycling side are the Americas, North and South America. In terms of the returns, we're still seeing very, very robust demand, particularly for high quality de-risked wind and solar assets. And this might be a funny analogy to make, but when interest rates went down and you look back maybe 12 or 15 months ago, and interest rates were very, very low, I'm going to be illustrative here. Let's assume you were selling at a 7% return. Interest rates have gone up materially maybe 150 or 200 basis points. We're not seeing the absolute return on the assets that we are selling widened by the same amount. Maybe it's 50 basis points wider, but that's not going to have a material impact on our business and the returns that we can generate developing assets at a higher return and then selling down to a lower cost of capital buyer. We actually draw a very similar parallel to the real estate world when interest rates go down, cap rates don't compress by the same amount, and when interest rates go up, cap rates don't rise by the same amount. It's a muted impact, and that's certainly what we're seeing in our asset sale processes as well.

That's useful context. Thanks very much guys.

Our next question comes from the line of Robert Hope with Scotiabank.

Good morning. First question, just on the commentary that you could beat your $6 billion to $7 billion investment target over the next five years, is this driven by successes so far, or the line of sight on the pipeline, or is it even the size of the Global Transition Fund or the next Global Transition fund?

I would say it's the first two Robert. Obviously the pace, since we set that target at our Investor Day last year has been very robust. And the, the comment we made at Investor Day we think holds true today, which is our ability to outperform that target is going to be dependent, I think the words we used almost regrettably is on how many large chunky transactions can we do? And if you look over the past six months, we've seen Westinghouse get announced, we've seen Origin get announced. Those are the types of large chunky transactions that can certainly push us above our run rate in terms of target. So it's definitely predicated on the transactions we've done to date, but as we look at the pipeline going forward, it still remains very robust and we have a lot of confidence that we can continue to keep executing on some of those large chunky transactions, and therefore quite confident that we'll outperform that target that we set.

All right, thanks for that. And then just maybe on as a follow up on that pipeline, any geographies, technologies or kind of spinoffs that are most attractive? Can you add a little bit of color where you're seeing the greatest opportunities?

Yes, certainly and maybe we'll answer the question a slightly different way. There is certainly a dynamic in terms of where we're seeing the pipeline shift, and in the last few years we've been very proud of our activity. We're thrilled about the investments we've made in investing in a lot of high quality developers, ones from the United States that are going to benefit tremendously from IRA businesses like X-Elio in Europe. But over the last few years where we haven't seen as much growth capital deployed is either into operating assets or into public companies. And I think origin is an example of the ladder changing and I think we expect that to continue. We are seeing more opportunities in the public markets today, potential public to privates, and then for the first time in a few years, we're beginning to see a number of very attractive opportunities to buy operating assets at very value, very attractive value entry points. So I would say that that's probably the biggest dynamic in terms of what we're seeing change in our pipeline.

I appreciate the color. Thank you.

Our next question comes from Rupert Merer with National Bank.

Hey, good morning everyone. A couple of followup questions here. First, with your investment into the Indian market, can you give us an update on your thoughts about global diversification and your appetite for investing into developing markets? How much of your portfolio could that make up?

Yes, it's a great question, Rupert, and I would say two things. One, our target balance hasn't changed. I think for years we've said we like to be approximately three quarters in developed markets and no more than probably a quarter in developing markets. If you actually look at our business today and if we look at our pipeline, given the scale of some of the transactions we've done recently and the fact that our large scale deals tend to be in developed markets, we're actually probably closer to 80% now in developed markets and 20% in developing markets. And that's not because we don't do lots of deals in our core developing markets, we do and will continue to do. It's just very simply that the largest deals we do tend to be in developed markets and that overweights those when we look at our global diversification. So I think historically we've said 75%, that remains true, but on balance today we're actually closer to 80%.

Okay. Great. And then on the pace of investment and looking at some of these large chunky deals, the next energy transition fund that you raise could be quite large, and we have seen the participation of BEP in deals come down. Where do you see that participation heading in the future? Is there any risk that say the scale of the amount of capital that you have to invest can crowd out the public participation?

No, I wouldn't say so. And what you know, perhaps the easiest way to frame that is, very similar to the first transition fund, we expect BEP to be the single largest LP in the second Global Transition Fund. And that's consistent with Brookfield's approach across all of its flagships. And then similarly, when we do do these large deals, BEP will continue to be an active participant in the co-invest in those deals. And what I would say is, in those large deals, it's great having those co-invest partners and even if that means that on a look through basis BEP's economic ownership might be less than say 25, that's fine. Brookfield still controls the investment. And really what it allows us to do is it allows us to target those larger transactions where we see less competition and very attractive risk adjusted returns, but it also allows us to diversify our business increasingly as we do more in different types of those transactions around the world. So we view it as incredibly beneficial to BEP. And I don't know if this is where you are going with your question. I think one thing that's important to highlight is, as the largest LP in those funds, BEP is entitled to priority co-invest, just like any major LP, and therefore the amount of economic exposure that we're taking to these investments is at our discretion. We can target the amount of co-invest that we would prefer, and therefore the amount that we're choosing to invest is at our discretion and based on what we see as most attractive from a capital deployment perspective, as well as achieving the diversification objectives that we have for the company. So yes, on some of the big deals, maybe our percentage goes down a little bit, but we see very few negatives and a whole bunch of positives around that dynamic.

Yes, very good. Thanks for the color.

[Operator Instructions] Our next question comes from Andrew Kuske with Credit Suisse.

Thanks. Good morning. I guess it's a big picture question, and when we look at things like Origin, you've got assets in the marketplace that maybe traded at discounted value given some of the fossil exposure. How do you think about allocating into those kinds of businesses on an accelerated basis in part because of what's happening on the Global Transition Fund, and then what does that do to a composition of generation at BEP itself?

Yes, certainly. Great question, Andrew. What I would say is, we are thrilled about the Origin investment. It really ticks three important boxes for us. It's a large scale transaction, it has an incredible decarbonization impact, and it's very attractive risk adjusted returns. So if we could do more deals like that, we'd obviously be thrilled. But I think there's really two important things to highlight. One is when you look through the thermal exposure that the company is taking on by doing transactions like Origin, one is it's incredibly minimal in the context of our global business and two, it is incredibly short-lived, because our whole business plan is to build out renewables as quickly and as attractively as possible to create clean low cost replacement capacity for that thermal generation fleet. Part of the reason why we like these investments is, the key value drivers around a transaction like Origin are almost no different than the key value drivers around a down the fairway renewables developer. If we can develop renewables at a fast pace at very attractive levels, it's going to drive incredible value for us within the Origin platform.

Okay, I appreciate that. And then maybe just continuing with that value enhancement strategy, you've got a lot of different levers to pull from a funding standpoint, whether it be capital recycling, just cash flows itself, co-investments, the fund. How do you think about the use of Pepsi as a currency as we saw one of the other Brookfield affiliates use their C-corp vehicle as part of a currency in a transaction? I guess just holistically, how do you think about that stacking up against all the other options you have?

Yes, certainly. The -- I would say when it comes to our funding strategy, it remains what it has been in the past and the way you framed the question was very helpful. We do have a number of levers within our existing portfolio to create a self-funding business model, and that's up financing of our existing assets and asset recycling primarily. But when it comes to considering other forms of funding, we'll make two comments. One, when it is incredibly valuable and strategic, we will -- the option of using equity is always on the table. We always look back at the example of Terraform and if we see those high value and strategic opportunities where we can use our shares to effectuate a transformational transaction, we'll always consider it. The other thing I would say is, if we continue to see an exceptionally robust pipeline of very attractive high returning deals, we may look to augment our funding strategy, but that would be a good news story because of the robust pipeline of high returning accretive deals and that will obviously be subject to what the market gives us in the next 12 or 24 months.

Yes, that's great. Thank you.

I'm showing no further questions in queue at this time. I'd like to turn the call back to Connor Teskey for closing remarks.

Well, thank you everyone for joining our call today. We continue to always appreciate your interest and support of Brookfield Renewable and we look forward to updating you on our Q2 conference call in a few months. Thanks and have a great day.

This concludes today's conference call. Thank you for participating. You may now disconnect.