TransAlta Corporation (TransAlta) has formed an agreement with its renewable unit TransAlta Renewables for an investment of approximately C$540m ($404m).

Under the agreement, TransAlta Renewables will be investing the capital for the parent company owned Sarnia cogeneration facility, Le Nordais wind farm and Ragged Chute hydro facility.

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Located in Canadian provinces of Ontario and Quebec, the facilities have a combined generation capacity of around 611MW.

The agreed investment will include acquisition of securities, which will be linked to the net distributable profits of the assets.

"We are pleased to have AIMCo, a high-performance investment manager with global experience, join us as a significant investor in TransAlta Renewables."

TransAlta has also signed a separate agreement with Alberta Investment Management (AIMCo) to sell up to C$200m ($149.5m) of common shares for TransAlta Renewables.

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Following the AIMCo deal, TransAlta will retain around 65% stake in its renewable unit and intends to continue management and operation of its assets.

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The two concurrent transactions are expected to generate $350m as cash proceeds for TransAlta, with which the firm intends to pay off its debts and strengthen its portfolio.

TransAlta president and CEO Dawn Farrell said: "With the proceeds from the transactions announced today, together with the Australian transaction that was completed in May of this year, we will achieve our debt reduction target for the year by generating cash proceeds of approximately $575m.

"In addition, we are pleased to have AIMCo, a high-performance investment manager with global experience, join us as a significant investor in TransAlta Renewables."

Earlier in the year, the Canadian energy giant had acquired around 71MW of long-term contracted renewable generation assets from an affiliate of Rockland Capital for $75.8m.