Australia’s IFM seeks major stake in Spanish energy giant

Australian investment fund IFM Investors is seeking to take a 22.7 per cent stake in Spanish energy firm Naturgy Energy, in a deal that could be worth as much as $8 billion.

IFM Investors issued a partial voluntary tender offer in the Spanish firm, meaning the offer is a ‘friendly’ quest to gain the substantial stake in Naturgy, and will likely require the cooperation of the energy company’s existing institutional investors.

Naturgy is headquartered in Spain, and is one of the country’s largest energy companies, with a strong focus on natural gas assets, along with electricity distribution network infrastructure.

The company also owns a portfolio of 4,600MW of renewable energy projects, spread across a mix of wind, solar and hydroelectric projects, located across Europe, and South and Central America.

The company also owns Australian subsidiary, Global Power Generation group, formerly known as Union Fenosa, which operates the 91MW Crookwell 2 wind farm in New South Wales and the 180MW Berrybank wind farm in Victoria.

The company is currently developing two additional projects, a Berrybank Stage 2 expansion that will add 107 MW and the Ryan Corner wind farm that will generate 218 MW north-west of Port Fairy.

Naturgy also recently secured agreements sell electricity from a future project, the 93MW Hawkesdale wind farm that is to be constructed in Victoria.

IFM said that it would offer to purchase up to 220 million of the outstanding shares from existing shareholders in Naturgy Energy, at a price of up to €23 per share (A$36), representing a total maximum offer worth €5.06 billion (A$7.95 billion), and represents an almost 20 per cent premium on the recent value of Naturgy shares.

IFM said that the offer was subject to a minimum level of acceptance, representing 17 per cent of Naturgy’s outstanding shares.

IFM Investors is owned by Australia’s industry superannuation funds, and manages investments on their behalf, and has around $150 billion of assets under management.

Last year, IFM Investors made a high profile announcement that it would commit to transitioning its investment portfolio to zero net emissions by 2050, which would involve offloading investments in fossil fuel industries and directing funds into renewable energy projects.

“As one of the largest infrastructure investment managers globally, IFM’s purpose is to protect and grow the long-term retirement savings of working people,” IFM said in its announcement. “IFM is also committed to environmental sustainability, demonstrated most recently by our announcement that we will reduce carbon emissions across our asset classes, targeting net zero by 2050.”

It is unclear how the stake in Naturgy will impact the investment firm’s efforts to decarbonise its portfolio.

The offer for Naturgy follows an international joint venture involving IFM Investors and global oil trader Trafigura Group, that will aim to build up to 2,000MW of new renewable energy projects.