BlackRock Inc. agreed to invest US$500 million in an arm of New York-listed Canadian Solar Inc. as it increases its bets on renewable power and energy storage. Canadian Solar shares jumped as much as 21 per cent.

A BlackRock fund is buying preferred equity in Canadian Solar’s Recurrent Energy unit that is convertible into a 20 per cent stake, according to a statement reviewed by Bloomberg News. Canadian Solar will continue to own a majority of the business. 

The fresh capital will help Recurrent Energy expand its project development pipeline, as well as transition into being a developer and long-term owner and operator of assets in markets including the US and Europe. The transaction is the first by BlackRock’s fourth climate infrastructure fund, which the firm launched in June with a target of $7 billion.

The deal aligns with BlackRock’s ambitions to become a player in the rapidly growing market for alternative assets. This month, it agreed to buy Global Infrastructure Partners for about $12.5 billion.

Recurrent Energy had a development pipeline of 26 gigawatts in solar and 55 gigawatt-hours in storage as of end-September, according to the statement. The BlackRock investment will exclude Recurrent Energy’s project development business in Japan and China, as well as some assets in Latin America. 

Founded in 2001, Canadian Solar has operations in more than 30 countries with 20,000 employees, its website shows. It holds a majority stake in Shanghai-listed CSI Solar Ltd., which encompasses solar module and battery storage manufacturing.

Bank of America Corp. and Banco Santander SA advised Canadian Solar on the deal. 

Canadian Solar shares surged 15 per cent to $24.13 at 10:04 a.m. in New York.