TransAlta said that the investment will help in maximizing the value of its hydro assets, boost its financial position to implement its strategy, and speed up its plans to return capital to shareholders. The company currently has power generation facilities across Canada, the US and Australia.

The investment from Brookfield will ensure TransAlta’s transition to 100% clean energy by 2025.

As per the agreement terms, Brookfield will make the investment by buying exchangeable securities, which will be convertible into an equity stake in TransAlta’s Alberta Hydro Assets in the future at a value based on a multiple of the future EBITDA of the hydro assets.

Apart from that, Brookfield has agreed to buy TransAlta’s common shares on the open market to boost its share ownership in the company to 9%.

TransAlta president and CEO Dawn Farrell said: “Brookfield’s investment is a strong endorsement of TransAlta’s strategy and future value.

“By crystallizing the value of our Hydro Assets, we can accelerate the return of capital to shareholders and invest in coal to gas conversions and strategic gas and renewable developments, while still meeting our goal to reduce senior indebtedness to $1.2 billion by the end of 2020. With Brookfield as a cornerstone shareholder, we are well positioned to invest in our business and increase value for shareholders.”

TransAlta plans to utilize C$350m ($261.2m) of the capital injection to press ahead with its coal-to-gas transition strategy. It will use an amount of up to C$250m ($186.6m) to buy back shares over three years, and the remaining amount to move ahead with the development of existing and new growth projects and also for general corporate purposes.

Brookfield Renewable Partners CEO Sachin Shah said: “We are pleased to partner with TransAlta to accelerate its transition to clean energy and support value creation for all shareholders.

“We look forward to contributing our capabilities, particularly our long-term expertise in the hydro sector, to enable the company’s growth over the long-term.