Binding offers are understood to be landing around now for Edify Energy and two names that feature as being in the final mix are Canadian pension fund CDPQ and Copenhagen Infrastructure Partners.
Another group also mentioned is IFM, but sources are less confident it will eventuate as the buyer.
The business that is up for sale through investment bank Lazard is likely to require a buyer to fund a multi-billion dollar development pipeline, although the equity value of Edify Energy is thought to be in the hundreds of millions of dollars.
The group has invested $1.9bn in renewable energy and infrastructure with solar projects covering over 50 square km, generating 1 gigawatt of power to date throughout Australia.
Edify Energy is owned by John Cole, who founded the business a decade ago.
Over time, the backers for its projects have included BlackRock, the Clean Energy Finance Corporation, CBA, Octopus Investments, Gentari, Westpac, Nord LB, Natixis, ICBC, DNB, the Australian Renewable Agency and the Queensland and Victorian Governments.
The company’s solar farms have won offtake agreements with Origin Energy and Rio Tinto.
Rio signed a solar and battery agreement with Edify Energy for its Gladstone operations in March, with the mining giant buying 90 per cent of the power and battery storage capacity generated by the Smoky Creek and Guthrie’s Gap Solar Power Stations for 20 years in central Queensland.
Historically, the company’s role has been developing projects and selling them, although it may still own a minority of the assets.
However, a buyer may develop a portfolio to retain.
Edify Energy has two large projects as part of its development pipeline that would likely require about $3bn in capital.
Copenhagen Infrastructure Partners and CDPQ may be attracted to the business because it would provide an opportunity to gain higher returns, which come with owning a development business that is more risky than one that owns existing renewable energy assets.
The purchase would provide the parties with a development team in Australia to embark on future work.
Copenhagen Infrastructure Partners does not currently have a development team in Australia.
The business is for sale as AGL Energy offloads a 20 per cent stake in Tilt Renewables through Bank of America, with the sale process expected to start next month.
AGL was part of the Powering Australia Renewables consortium that purchased the business in 2021 for $2.8bn.
Other consortium members included Queensland Energy Corporation and Mercury Energy, as well as the Future Fund, and some think existing investors exercise their pre-emptive rights and buy the AGL stake.
AGL requires the business to provide cheap power to sell to its retail energy customers, whereas the other owners want to maximise returns so is likely selling because objectives are not aligned.
Financial buyers are the most likely to line up for the stake, such as sovereign wealth funds and pension funds.
That sale comes ahead of REZ Zone renewable energy developments in NSW that require capital for development from next year.
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