APA shares fell on Friday as speculation emerged the gas pipeline owner is bidding for the $2bn Zenith Energy, with the pipeline company’s stock already down almost 20 per cent in a year.
Analysts and market experts on Friday said they were surprised by the move and believed an acquisition would not be well received by investors, still reeling over APA’s $1.8bn acquisition a year ago of Alinta Energy assets.
APA tapped the market to fund the acquisition of a solar farm, power stations and a gas pipeline, raising $675m at $8.50 per share, but its share price fell over 2 per cent on Friday to $6.82 just before the close.
It was part of a quest to have less carbon-intensive energy assets in its portfolio to appease climate change-wary investors.
While APA is not paying out distributions to fund development opportunities, the company has not delivered on its Alinta purchase, and the thinking is it needs to prove up the opportunity before embarking on another deal.
All eyes are now on shareholder Unisuper after APA’s largest investor dumped $500m worth of the stock last month, amounting to 5.3 per cent, and taking its holding down to less than 4 per cent.
There have been suggestions Unisuper’s top decision-makers were not impressed by the fact chief executive Adam Watson was absent from a site visit to the Pilbara in May.
It was held for investors to inspect assets purchased as part of the Alinta transaction, and led by APA’s chief financial officer, Garrick Rollason, and Darren Rogers, responsible for the Pilbara business and growth.
APA recently saw the departure of its head of strategy and corporate development, Ross Gersbach, whose leaving party was held at a Potts Point venue in Sydney on October 24, featuring some of the company’s top identities over the years.
DataRoom revealed on October 16 Pacific Equity Partners and pension fund OPTrust had fired the starting gun on a formal sale process for the $2bn Zenith Energy business through RBC and Azure Capital, or a partial selldown.
Zenith provides contracted power to miners in remote locations and generates well over $120m of annual earnings before interest, tax, depreciation and amortisation.
As previously reported, AustralianSuper, GIP, Stonepeak, IFM, Kohlberg Kravis Roberts and EQT are all potential suitors.
Zenith Energy has more than 710 megawatts of capacity under contract or in development with a renewable energy focus.
Pacific Equity Partners purchased what was then a listed business in 2020 for $250m, including debt in a deal advised by Highbury Partnership and Minter Ellison.
Crown owner Blackstone fancied to snap up Star
There’s talk that the New York-based private equity firm is once again having some serious conversations in the background about taking over Star Entertainment.
NAB weighs return to Scottish roots
The $1bn-plus sale process for the non-bank lender Scottish Pacific is yet to start in earnest, but there’s one party that has already been at least kicking the tyres.