Why AGL CEO Brett Redman is in a hurry

AGL’s boss has taken the biggest plunge of his corporate career, slicing it in two in a bid to revive both its retail and generation arms.

AGL chief Brett Redman at the group’s Sydney office. Picture: Britta Campion / The Australian

After 14 years at AGL Energy, Brett Redman is suddenly a man in a hurry.

The AGL boss took the biggest plunge of his corporate career on Tuesday, slicing the power giant in two in an attempt to revive the fortunes of both its retail and generation arms.

Redman has been in the top job for nearly three years but was CFO for six years before that and an instrumental figure in two contrarian investments: taking control of Victoria‘s Loy Yang A coal plant and then buying the giant Macquarie Generation business in NSW comprising Liddell and Bayswater.

Those bets may have proved profitable but owning Australia’s biggest and most polluting coal fleet became problematic relatively quickly.

Climate-aware investors are now wary of being tied to a big emitter, forcing Redman’s hand to remodel AGL as a carbon-neutral green retail business, New AGL.

The high carbon PrimeCo will include its coal plants along with a big portfolio of wind assets to green up its generation footprint.

New AGL will likely bring with it a bigger pool of investors, although the carbon laden PrimeCo will be a much tougher sell.

When Redman was appointed to the top job, he described himself as both a change agent and stabiliser.

Investors were satisfied he was able to reset the company and improve its relationship with Canberra after the combative approach from predecessor Andy Vesey damaged its standing.

Redman could barely put a foot wrong in the first part of his tenure, with AGL snaring record underlying profits amid high electricity and gas prices.

That’s now faded away after a flood of renewables triggered declines in wholesale prices, pressuring its core electricity earnings.

With AGL no longer unable to rely on the stabilising effect of regular utility style returns, Redman was forced to become change agent perhaps more quickly than intended.

AGL shares have nearly halved in the last nine months, underscoring the need to restructure.

The result is a sudden flurry of announcements in the last few weeks — from the Tilt renewables deal to big batteries and, on Monday, a digital tie-up with UK operator OVO — which have left some in the market unconvinced by the overall coherence of the strategy.

Still, Redman’s hand was forced, as he admitted on Tuesday.

“We have two choices: we can stand still and the risk is we get left behind by a market that is moving forward really quickly. Or we can separate into two businesses where the starting point of value is what is in the combined business today.”

Redman now faces a huge task to turn a high-level concept into two separate operating companies attractive to shareholders and able to deliver earnings growth against a tough market backdrop.