Macquarie Capital lines up investors for demerged Accel Energy

AGL says Accel Energy will provide reliable, low-cost energy with a strong focus on repurposing existing thermal generation sites as low-carbon industrial energy hubs.

Investment bankers at Macquarie Capital are understood to have lured at least two parties interested in backing AGL Energy’s spin-off Accel Energy, say sources.

The talk in the market is that there are one or two groups around the hoop.

DataRoom understands that those looking are companies that invest in the energy space but do not have as much of a strict stance around environmental, social
and governance (ESG) matters when it comes to investing in coal-related companies.

Macquarie has been trying to find an infrastructure fund to invest in a renewable energy vehicle that would provide about $500m worth of capital to help transition Accel Energy away from coal over the longer term.

This would occur before the demerger of the business is scheduled to happen before June.

As well as infrastructure funds, alternative investment firms like Oaktree Capital Management and Apollo Global Management could show interest.

It comes as hopes continue to fade that Canadian private equity firm Brookfield and billionaire Mike Cannon-Brookes may be able to return to the negotiating table for another swing at AGL Energy at a similar price, with AGL’s shares now trading far higher their last offer of $8.25 per share.

The market value of AGL has increased on higher electricity prices.

AGL shares on Thursday closed at $8.51 with its market value at $5.6bn, in what appears to vindicate the board for knocking back the Brookfield offers – the first at $7.50 per share was rejected.

Unless the share price collapses with investors unhappy about the demerger terms, Brookfield would have to pay a much higher premium to see any bid succeed.

Should the demerger go ahead, some believe that buyers for the remaining part of AGL will come forward, such as Shell or Iberdrola, with offers far more compelling than what Brookfield would be able to pay.

One deterrent for them, however, could be that the business includes gas generation, which may be unattractive to renewable energy investors.

Further details on the demerger are due next month.

While the remaining part of AGL has a plan to be fully carbon neutral by 2040, Accel Energy has a goal of net-zero emissions by 2047.

AGL last year was said to be seeking about $500m of debt from the bond market for Accel Energy and the debt raising was understood to have got away.

The business will consist of AGL’s coal-fired power generation assets and will hold a 15 per cent interest in AGL Australia.

AGL says Accel Energy will provide reliable, low-cost energy with a strong focus on repurposing existing thermal generation sites as low-carbon industrial energy hubs.

It will bring forward the closure for its Bayswater Power Station to 2033 and to 2045 for its Loy Yang A Power Station.

Its Liddell Power Station is scheduled to close by April 2023.

AGL said the readiness of the energy system to operate without critical baseload generation would determine whether an earlier target could be achieved.