GIP, AGL commit $1.4b to Australia renewables

GIP will be a 49% equity partner in the Energy Transition Investment Partnership (ETIP), which AGL is launching as part of an ongoing reorganisation effort that would see the Sydney-listed company split into two separately listed entities, AGL Australia and Accel Energy.

Accel would house the traditional coal-fired electricity business and build a renewables portfolio with ETIP. AGL Australia would continue as a multi-service energy retailer focused on distributed energy and low or carbon-neutral products and services.

Some AGL shareholders have indicated they intend to vote against the demerger, putting the rollout of ETIP in some doubt. They include Grok Ventures, which was established by Atlassian co-founder Make Cannon-Brookes, and reportedly, superannuation fund HESTA.

Grok said on May 2 it would acquire a more than 11% interest in AGL with a view to becoming the largest shareholder and blocking the split. AGL responded yesterday with a statement confirming it was committed to proceeding as planned and implementing the demerger by June 30.

Earlier this year, Grok made two attempts to acquire AGL entirely alongside Brookfield Asset Management. The investors’ latest approach, said to value the company at AUD 8.5bn including debt, was rejected in March by the AGL board, which noted the offer did not reflect the value to be created by the demerger.

In addition to a shareholder block, ETIP is subject to Foreign Investment Review Board approval of GIP’s participation. GIP, which currently owns about 15 gigawatts of renewables assets globally, plans to acquire 49% of the ETIP development pipeline for USD 94m, including an upfront payment of USD 40m.

“There was strong interest shown in ETIP by a number of globally renowned infrastructure investors, and we are excited to have selected Global Infrastructure Partners,” AGL CEO Graeme Hunt said in a filing. “If all the foundation projects in ETIP were to proceed, it would represent an investment of approximately USD 4.7bn into the future of energy in Australia.”

ETIP aims to develop, own, and manage an initial 2.7 GW of renewable and low-carbon assets, with additional capacity to be added in the coming years. AGL’s proposed Bowmans Creek wind farm in New South Wales (450 megawatts) and the Loy Yang grid-scale battery (200 MW) in Victoria are set to be the first projects developed. Final investment decisions for both are expected by the end of 2022.

AGL generated AUD 10.9bn in revenue for the 12 months ended June 2021, down from AUD 12.2bn the previous year. Over the same period, net profit fell from AUD 808m to AUD 537m.

The company’s stock has fallen 67% in the past five years but has rebounded 31% since the start of 2022. It was trading at AUD 8.30 as of midday May 4, reflecting a market capitalisation of AUD 5.6bn.

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• Topics
• Australasia
• Cleantech
• Infrastructure
• Australia
• Grok Ventures
• renewable energy
• energy