The share price of Genex Power has thrown up questions about whether a consortium led by the interests of Atlassian co-founder Scott Farquhar will proceed with plans to buy the renewable energy provider.
Shares in Genex closed at 21.5c on Monday, some distance from the takeover offer made by the Skip Essential Infrastructure Fund and infrastructure investor Stonepeak of 25c a share. Skip is run by Farquhar’s investment banking wife Kim Jackson.
The consortium increased its offer to 25c for the business, valuing it at $346m, after its first 23c per share bid was rejected.
It won the right to conduct due diligence on Genex last month at the higher price.
But now there is uncertainty about whether it will complete and whether the bidders have found they can make the price stack up.
The company should be trading closer to the offer price if the deal was looking likely to go ahead – but only time will tell whether the suitors walk away or revise their offer downwards.
It is worth remembering that investors in Ramsay Health Care got it right when the shares were trading at between $70 and $80 in recent months, as doubts started to surface about whether Kohlberg Kravis Roberts would follow through with a firm offer of $88 per share for country’s largest private hospital operator.
KKR originally offered $88 per share for Ramsay in April, a price that was enough to win the private equity firm the right to carry out due diligence.
The 23c per share proposal for Genex was pitched at a 70 per cent premium. Genex said it would recommend the 25c offer, subject to no improved proposal emerging and the outcome of an independent expert’s report.
Skip already holds 19.9 per cent of Genex so appears to be committed to its target.
Genex is one of the last remaining listed renewable companies on the ASX after Tilt Renewables was taken over by an AGL-led group last year for $2.9bn.
Among Genex’s assets are its Queensland-based Kidston pumped hydro project, which has been supported by the federal government’s Clean Energy Finance Corp, and received other state and federal government grants.
Genex is being advised by Goldman Sachs and Gilbert + Tobin.
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