AGL consortium ups offer for Tilt in bid to fend off Canadian rival

An AGL consortium looking to take over listed renewable energy developer Tilt Renewables has upped its offer to more than $NZ3 billion ($A2.83 billion) in an effort to fend off a rival bid from a major Canadian pension fund.

Tilt Renewables announced in March that it had received a $2.75 billion takeover offer from a joint consortium led by New Zealand utility Mercury NZ, and the AGL Energy backed Powering Australian Renewables fund.

Tilt is one of the very few pure-play renewable energy ventures listed on the Australian stock exchange and the takeover offer follows similar bids that took previously publicly listed companies Infigen Energy and Windlab delisted.

Shares in Tilt Renewables went into a trading halt on Thursday last week, with the company flagging in a statement to the ASX that it would soon be releasing details of a revised takeover offer.

A rival bid is understood to have come from the Canadian pension fund manager Caisse de dépôt et placement du Québec, which has $C365 billion ($A377 billion) in assets under management and is on the search for low carbon investments.

The pension fund, which had been on a shortlist of competing bids to take over Tilt, made a reported offer of $NZ8 per share (A$7.39), prompting the AGL led consortium to up its takeover offer to $NZ8.10 per share ($A7.48).

The increased bid values Tilt at $NZ3.07 billion ($A2.83 billion), and AGL said it would increase its contribution to the takeover to $A357.6 million.

The revised bid comes with the condition that Tilt Renewables may no longer evaluate any further “competing proposal” for the takeover, placing the AGL-Mercury consortium in a prime position. The consortium is aiming to finalise the takeover of Tilt by August, with shareholders voting on the proposal in July.

Chief executive of Mercury NZ Vince Hawksworth said the company increased its bid as it saw the importance in the New Zealand based assets of Tilt Renewables remaining under local ownership.

“As New Zealand addresses the continuing need for decarbonisation and recognising the vital role that electrification plays, we believe ownership of these strategic assets by Mercury, a New Zealand owned generator with an outstanding track record of generation development, is in New Zealand’s best interest,” Hawksworth said.

“We are pleased to have strengthened the Scheme arrangements with Tilt and see this transaction as an important step for Mercury to make an even more significant contribution to New Zealand’s decarbonisation goals through the further development of renewable generation.”

The majority shareholder in Tilt Renewables, infrastructure investment group Infratil, said that it supported the revised offer from Mercury and AGL. Infratil holds a 65.5 per cent shareholding in Tilt, a stake now worth just over $A1.85 billion.

The Powering Australian Renewables Fund was founded as a vehicle to help AGL manage its investments in large-scale renewable energy projects. The fund was created with co-investment from the Queensland government-owned Queensland Investment Corporation (QIC) and the Australian government’s Future Fund.

The acquisition of Tilt’s Australian portfolio, which the takeover bid effectively values at $A2.1 billion, would see the fund expand to include the Snowtown North and Dundonnell wind farms and a significant pipeline of new project developments.

ASX listed shares in Tilt Renewables were trading around 5 per cent higher on Monday, at $7.34 per share.