Enbridge Income Fund Holdings Inc. will buy Enbridge Inc.’s (ENB) Canadian liquids pipeline business and certain renewable energy assets for C$30.4 billion (US$24.8 billion), freeing cash for its parent company, Bloomberg reported June 19.

“The transaction significantly transforms the scale of the fund’s business, provides it with a low risk source of secured growth and supports an expected 10% increase in the company’s dividend following closing with further anticipated dividend growth through 2019,” Perry Schuldhaus, president of Calgary-based Enbridge Income, said in a statement June 19. The transaction is expected to close in September.

Enbridge will continue to operate the pipeline assets. The company said the deal will reduce its cost of capital and allow it to boost payments to shareholders. Enbridge will receive C$18.7 billion of units in the income fund, which will also assume C$11.7 billion of debt, according to the statement. It will also receive incentive distribution rights.

“It remains to be seen how much value this creates,” Dirk Lever, an equity analyst with AltaCorp Capital Inc. in Calgary, said in a phone interview. “You’re in a point in time in the marketplace where it’s pretty tough for anything to do with energy.”

Enbridge rose 3.2% to C$57.31 at the close in Toronto, the most in almost five months. Enbridge Income gained 3% to C$34.70.

The sale to the income fund is the first in a two-stage reorganization Enbridge announced last year that will enable it to focus on developing faster-growing projects, said Michael Kay, a pipeline analyst for Bloomberg Intelligence in New York. The company also plans to sell U.S. pipeline assets to another affiliate, Enbridge Pipeline Partners LP.

“They’ve been talking about this for a while,” Kay said in a phone interview. “It allows them to fund their projects and pay out a higher dividend rate.”

Pipelines Business

The pipelines business has C$13 billion in planned growth that will come into service by 2018. The deal encompasses Enbridge’s Canadian Mainline System, which includes the Canadian portion of the Alberta Clipper pipeline that moves oil, natural gas liquids and refined products. The fund will also obtain the Regional Oil Sands System, which connects producers to hubs in Edmonton and Hardisty, Alberta.

The main line, which is linked to the oil sands network, delivers crude from Alberta to cities including Chicago and Toronto. Enbridge still plans to drop down U.S. assets, including the southern section of the main line, to the U.S. partnership it controls, Chief Executive Officer Al Monaco said today on a conference call with analysts and reporters.

The cash flow outlook for both entities after the transaction is little changed from assumptions made in December, when the plan was announced, Monaco said.

Wind Assets

Enbridge affirmed an earlier forecast of C$44 billion of capital investment in the U.S. and Canada through 2018. That includes spending by Enbridge Income, which expects to sell about C$3 billion in new equity during the period, CFO John Whelen said on the call.

Renewable energy assets include a 50% interest in the Saint Robert Bellarmin wind farm, a 67.5% interest in Lac Alfred wind farm and an 80 percent stake in the Massif du Sud wind farm, all in Quebec, plus a 50 percent interest in the Blackspring Ridge wind farm in Alberta. The wind assets have a combined generation capacity of 830 megawatts.

Enbridge Income Fund holds low-risk energy assets including power plants, pipelines and energy storage. Enbridge, which created the fund in 2003, has a 67.3% stake in it, according to its website.

The company will seek the approval of its shareholders at a special meeting on Aug. 20. Shareholders of record on July 10 will be entitled to attend and vote at the meeting.