UPC and AC Energy have launched a hostile $777 million bid for listed Australian renewables company Infigen Energy, as it seeks to combine its own ambitious development portfolio with that of one of the country’s most established independent players.
UPC and AC Energy, who are linked with the Philippines-based Ayala Corp through a complex ownership structure, made the bid for Infigen on Wednesday after their jointly owned bidding vehicle UAC Energy snapped up a 12.8 per cent stake in their target company in a market raid late Tuesday.
UPC’s development portfolio includes one of the country’s biggest wind projects, the proposed Robbins Island Renewable Energy Park and Jim’s Plain Renewable Energy Park in north-west Tasmania, sized at up to 1,200MW, and which would form a key part of the state’s “Battery of the Nation Project”.
It is also seeking to develop the 720MW New England Solar Farm in regional NSW, the 300MW Bridle Track solar project in South Australia, the 160MW Axedale solar project in Victoria, and the Baroota pumped hydro project (250MW and eight hours of storage) also in South Australia.
Infigen owns a range of wind projects in NSW, South Australia and W.A., including the Capital, Lake Bonney, Bodangora, Alinta and Woodlawn wind farms, along with the Lake Bonney big battery.
It has recently bought the Smithfield fast-start gas generator in NSW and will lease similar 120MW of fast-start generators from the South Australia government, and will use them to play a similar “firming” role and it has off take agreements with other wind projects.
Its development assets include the Forsayth, Capital 2, and Flyers Creek wind farms in Queensland and NSW.
“The businesses of Infigen and UPC/AC Renewables Australia are complementary from an investment perspective,” UAC chairman Anton Rohner said in a statement.
“We have ready access to capital and significant renewable energy expertise that will position us well to support Infigen’s pipeline of projects and focus on much needed renewable energy investment and associated employment in Australia.”
ITK analyst David Leitch noted that the bid for Infigen follows Federation’s proposed takeover of another listed wind and solar developer Windlab, and last year’s attempt by Infratil to take full control of Tilt Renewables.
“Clearly private equity values wind and solar assets more highly than the sharemarket,” Leitch said.
“Notably neither AGL nor Origin have been able to bring wind and solar development into their mainstream portfolios. This possibly reflects the excess return on capital that the superannuation sector requires in Australia compared to the underlying actual cost of capital as perceived by private equity.”
The offer is pitched at 80c a share, which represents an about 35 per cent premium on the last closing price, and a similar premium to its average price over the last year. Infigen issued a statement saying only that it noted the offer, and advised shareholders to take no action, pending further information.
Credit Suisse is acting as financial adviser and Herbert Smith Freehills is acting as legal adviser to UAC Energy in relation to the offer. Goldman Sachs and Lazard are acting as Infigen’s financial advisers. Gilbert + Tobin are acting as legal adviser.
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