Market watchers may think it will not be easy for UAC Energy to convince Infigen Energy to back its $777m takeover bid for the Australian-listed renewable energy provider, but what is likely to be the real test for the company backed by a Filipino billionaire is getting its deal past the Foreign Investment Review Board.
At the time the Australian government is cracking down on foreign investment, with tough new rules on scrutiny for foreign bids unveiled last week, various news reports can be found online about corruption allegations linked to UAC Energy’s parent company, Ayala Corporation.
The reports surfaced around December last year, detailing how the Philippines Stock Exchange-listed Ayala, with a market value of about $13.8bn, faces allegations of corruption over government contracts, relating to its land and water ventures.
UAC is an Australian company that is 75 per cent owned by Ayala Corporation’s subsidiary AC Energy Group and 25 per cent owned by UPC Renewables Australia.
Ayala’s chairman and chief executive is Jaime Zobel de Ayala, part of a billionaire family of German and Spanish heritage that has built up a dynasty in The Philippines since the 1800s.
While the claims are still thought to remain under investigation and do not relate to the direct entity bidding for Infigen, they will certainly not help the UAC bid.
UAC already has renewable energy projects in Australia, including Robbins Island Renewable Energy Park and Jim’s Plain Renewable Energy Park in northwest Tasmania, the New England Solar Farm in regional NSW, the Baroota Pumped Hydro Project and Bridle Track Solar Project in South Australia and the Axedale Solar Farm in Victoria.
As reported by DataRoom last week, Infigen has been a popular target for many renewable energy investors for some time, but the challenge has always been getting past Philip Green, who acts on behalf of The Children’s Investment Fund, which owns 33 per cent.
His price expectations have always been over 90c, according to those in the market — even before the acquisition by Infigen of the Smithfield Energy Facility in NSW and before improvements were recently made to its debt position.
Other suitors have put forward offers that value the company at between 60c per share and 70c, say sources, so if the 80c a share offer by UAC is rejected, it will be a bold move by others keen to offer top dollar — even if the business is in the best position yet.
Market analysts are doubtful another party will come forward, given two shareholders now have about 50 per cent of the register locked up.
This is despite the stock trading above the bid price at 81.5c.
Last Thursday Infigen, which is advised by Lazard and Goldman Sachs, told its investors to take no action over the takeover bid, and while the board has conducted some preliminary analysis, it is yet to receive a bidder’s statement.
Mr Green, who is an Infigen director, is thought to be against the offer, given that he did not sell any of his shares to UAC for it to amass 19.9 per cent.
UAC is advised by Credit Suisse.
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