The acquisition has been priced at $608m.
The two companies have formed a joint venture to identify, develop, and construct clean energy and water infrastructure assets with a global focus.
Algonquin Power & Utilities CEO Ian Robertson said: "The formation of the AAGES joint venture with Abengoa and our investment in Atlantica are important first steps of Algonquin's strategy to enter markets outside of Canada and the United States.
"AAGES provides a unique opportunity for APUC to grow in selected international markets with a proven, experienced partner, and to access a deep pipeline of new opportunities which will create enduring value for our shareholders. The investment in Atlantica is expected to be immediately accretive, complementary to our existing portfolio, and further supports our long-term dividend growth objectives."
The stake acquisition is expected to be finished in the first quarter of 2018, subject to regulatory approvals and other closing conditions.
Atlantica Yield is a UK-based company which has a portfolio of 1.7GW of clean energy generating capacity along with 1770km of electric transmission lines and two desalination plants. The company has a presence in North America, South America, Europe and Africa.
