Alinta Energy is believed to be considering options for a sale of part or all of the business, five years after its Hong Kong owners purchased the electricity generator and retailer for $4bn.
Chow Tai Fook Enterprises took control of Alinta in 2017 from private equity firm TPG Capital, which had made efforts to float the company that once was part of the empire of the collapsed investment bank Babcock & Brown.
Some believe UBS and Goldman Sachs could be close to the situation, and Lazard Australia may have an involvement, given it was the adviser to TPG Capital on the sale of Alinta to the Hong Kong investor.
Sources say Chow Tai Fook is keen to secure more capital.
Alinta controls 85 per cent of the West Australian retail energy market. It was rescued from the ashes of the Global Financial Crisis more than a decade ago.
Most of Alinta Energy’s 3000MW of power comes from gas-fired power stations, with 7 per cent generated from renewable sources, and it has been moving towards a goal of producing more than 1500MW of renewable energy by 2025.
Its Australian and New Zealand businesses are run from Sydney. It employs about 720 people and supplies gas and electricity to more than 790,000 homes.
As of June 2020, it was generating $3.4bn in revenue and $239m of net profit.
Alinta has power generation assets including the Wagerup, Pinjarra, Newman and Port Hedland gas-fired stations in WA and the Goldfields gas pipeline in the state.
It also has the Braemar gas-fired power station in Queensland, the Bairnsdale gas – fired station in Victoria, the Reeves Plain power station development in South Australia and the Glenbrook co-generation plant in New Zealand, as well as the Loy Yang B coal-fired power station in Victoria.
It owns wind farms in Victoria and WA and solar farms in Queensland.
Australian utilities have attracted interest from overseas investors in the past as prices for natural gas and electricity jumped.
However, energy retailers are struggling due to the rocketing costs of financing out-of-favour coal-related assets and great competition from renewables.
Chow Tai Fook Enterprises is controlled by the wealthy Hong Kong jewellery family of Cheng Yu Tung and invests largely in real estate. At the time it purchased Alinta the company generated $420m of earnings before interest, tax, depreciation and amortisation and the price equated to 9.5 times EBITDA.
Meanwhile, Energy Australia is also considering options for its business through investment bank Morgan Stanley.
The understanding is that a partial selldown is being contemplated and buyers are already circling.
However, the coal assets could deter some buyers.
Other renewable energy assets are set to hit the market as companies vie for the right to develop the NSW government’s renewable energy zones.
The zones combine renewable energy generation with battery storage and high-voltage poles and wires to delivery energy.
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