Brookfield bounces back with $10bn takeover of renewables giant Neoen
The $10bn deal to buy Australia’s biggest renewable energy giant Neoen kills off any lingering interest from Brookfield in previous takeover targets Origin Energy and AGL.
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Canada’s Brookfield will go head to head with Andrew Forrest for the title of Australia’s biggest renewable energy operator after signing a $10bn deal to buy France’s Neoen, just months after a takeover for Origin Energy was spurned by shareholders.
Neoen holds the crown of Australia’s largest renewable energy operator with 3.8 gigawatts of operating and under construction assets and plans to hit 10GW of renewable energy capacity by 2030.
Dr Forrest’s Squadron Energy has 2GW operating and under construction, with a pledge to deliver 14GW of renewable energy by 2030.
Brookfield had planned to sink $20bn into Origin Energy through to 2030 to build up to 14GW of new renewable generation and storage facilities in Australia. However, a drawn-out $18.7bn takeover of Origin with EIG Partners failed to win over enough shareholders and the process was canned in early December.
While Brookfield has been watching Neoen’s renewable development for several years, it only turned its attention to the French green operator after the Origin offer was killed off.
That Origin bid came just a year after Brookfield’s public pursuit of AGL Energy with billionaire Mike Cannon-Brookes also failed.
The Neoen transaction also signals a formal end to any lingering corporate interest from Brookfield in both Origin and AGL.
The Neoen cash deal was pitched at €39.85 ($65.20) a share, a 26.9 per cent premium to the French company’s last closing price, with Singaporean state investor Temasek also on board for the buyout.
Neoen, which has backed the Brookfield bid, also operates in its native France and the Nordics with an 8GW portfolio of wind, solar and storage assets and a 20GW pipeline.
Neoen is 42 per cent-owned by French billionaire Jacques Veyrat through his Impala SAS holding company.
“Acquiring Neoen further strengthens Brookfield’s global scale, while diversifying into key renewables markets and adding expertise in battery storage technology,” said Connor Teskey, Brookfield Asset Management’s renewable power and transition chief executive.
“We look forward to partnering with management to scale up the business to meet the growing demand we are seeing for clean power.”
Brookfield’s investment will be made through its Global Transition Fund, launched in 2021, with a mandate to invest billions of dollars in renewable energy.
Led by former Bank of England and Bank of Canada governor Mark Carney, BGTF has raised more than $US15bn ($22.7bn), and is now the world’s largest private institutional investment fund focusing solely on investing in the global transition to renewable energy.
Neoen already operates 21 local renewable energy developments, including wind farms, solar projects and large-scale batteries.
The Australian Energy Market Operator estimates the country needs 57GW of grid-scale solar and wind generation capacity to be installed by 2030. The current capacity is 19GW.
Neoen in April signalled plans to sell a 30 per cent stake in its Australian unit to accelerate the expansion of wind, solar and storage plants across the country.
Neoen has started to work with a financial adviser on the potential sale, which could take place in the second half of 2024 should a buyer be found. According to reports by Bloomberg, the 30 per cent stake could raise more than €1bn ($1.65bn) and would be part of Neoen’s plan to expand in Australia and elsewhere past 2025 without having to undertake a new share sale by the Paris-based parent company.
However, that process was effectively overtaken by Brookfield’s takeover bid for the entire company, The Australian understands.
Australia is one of Neoen’s biggest growth markets, accounting for 47 per cent of its portfolio, and it revealed plans in February to double its zero emission generation pipeline locally by 2030 to 10GW.
Along with other renewable energy developers, the company has been affected by market sentiment that higher interest rates and building costs could undermine returns on solar and wind projects.
More broadly, nearly 20 per cent of Australia’s most advanced renewable energy developments, with a combined capacity larger than the country’s biggest coal power station, have experienced delays within the past year – analysis conducted by The Australian shows.
It shows 15 of the 79 new energy projects considered by the Australian Energy Market Operator to be so advanced that development is essentially assured have experienced delays. The combined capacity of the 15 projects is nearly 3.5GW, which is substantially larger than Origin’s Eraring coal power station.
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