AGL leads renewable power play in agreed $2.75 billion bid for Tilt

Australian-New Zealand renewables developer Tilt Renewables is to be taken private after agreeing to joint $2.75 billion by the AGL Energy backed Powering Australian Renewables fund and New Zealand utility Mercury NZ.

Through the deal, the Tilt Renewables business will effectively be split up, with the Australian and New Zealand parts of the business, which are listed across the respective Australian and New Zealand stock exchanges, being acquired by different members of the takeover consortium

The takeover offer for Tilt’s Australian business has been launched by Powering Australian Renewables, a partnership between energy giant AGL Energy (20 per cent), Queensland government-owned investment group QIC (40 per cent) and the federal government’s Future Fund (40 per cent).

Tilt Renewable’s New Zealand business will be acquired by New Zealand utility Mercury as part of the larger takeover consortium.

Tilt Renewables currently operates a portfolio of 836MW of generation across seven wind farms, across Australia and New Zealand. This includes the Snowtown North and Dundonnell wind farms.

But the key asset for PowAR, which currently operates four assets – the Nyngan and Broken hill solar farms in NSW, and the Silverton and Cooper’s Gap wind farms sold to it by AGL – is Tilt’s 3,500MW development portfolio, which includes projects like the 1,000MW Liverpool Plains and 250MW Rye Park wind projects.

“Tilt is a great business, with a passionate, committed team that has an enviable track-record,” Powering Australian Renewables CEO Geoff Dutaillis said in a statement.

“We intend to build the Australian business around the existing team’s expertise and experience and extend our lead as the No 1 owner and operator of wind and solar generation in Australia.

“PowAR’s strong capital partners and track record of delivery on development projects underpins our confidence that we will be able to realise the full potential of Tilt’s outstanding development pipeline.”

The value of that pipeline of new projects – particularly to AGL which now finds itself at a critical pivot point as it realises that the coal assets that now dominate its portfolio will no longer be the money-spinners once assumed – is reflected in the offer price to Tilt.

“The proposed acquisition by PowAR will provide more renewable energy options in AGL’s generation portfolio, further supporting our orderly transition away from coal-fired power and responding to our customers’ increasing appetite for cleaner energy,” AGL Energy CEO Brett Redman said.

Under the offer, shareholders of Tilt Renewables – largely Infratil (65 per cent) and Mercury (19 per cent) will receive NZ$7.80 (A$7.22) per share in cash, with the offer valuing the company at $A2.75 billion.

Tilt’s ASX listed shares jumped more than 15 per cent to around $7.10 in early trading on Monday following the takeover announcement and are now trading at more than twice their value in late 2020, before news that Tilt was searching for a buyer first became public.

The takeover has the backing of the Tilt Renewables board, which selected the Powering Australian Renewables and Mercury NZ offers after calling for proposals from potential buyers and receiving several offers from a number of interested parties, including energy infrastructure group APA Group and French energy giant Engie.

Tilt said in a statement to the ASX on Monday that it believes the takeover offer represents good value for both shareholders as well as ensuring the company’s project development pipeline will be progressed by new owners.

“This compelling acquisition proposal is a result of Tilt Renewables’ constant focus on delivering long‐term value for shareholders and the Board is pleased that, with these new owners, the transition to renewables in Australia and New Zealand will continue to accelerate,” Tilt chair Bruce Hawker said.

The Powering Australian Renewables fund was established in 2016 as an investment vehicle for AGL Energy and QIC to drive new investments and acquisitions into large-scale renewable energy projects.

But it had little in the way of a pipeline, and the deal with Tilt will give it access to the one of the biggest, if not the biggest, pipelines in Australia. RenewEconomy also understands that it will be looking for more storage assets, over and above the Snowtown battery currently being considered by Tilt.

AGL said in its statement that the acquisition of Tilt Renewables would provide the electricity retailer greater access to supplies of renewable electricity in Australia, including the recently completed 336MW Dundonnell Wind Farm.

“Tilt’s exceptional renewable asset portfolio is matched by a significant development pipeline, with more than 3,500 MW capacity across various technologies, including wind, solar, battery storage and peaking capacity in Australia,” Redman said.

AGL is to invest a further $A341 million into the Powering Australian Renewables fund as its contribution towards funding the Tilt takeover.

The acquisition will see yet another pure-play renewables business return to private ownership after listing on the ASX. Last year saw wind energy developers Infigen Energy and Windlab both acquired by private investors and delisted from the stock exchange.

Windlab was acquired by a consortium backed by mining magnate Andrew Forrest and Federation Asset Management, and Infigen Energy has been incorporated into Spanish energy giant Iberdrola’s substantial portfolio of renewable energy assets.