Genex rejects billionaire Scott Farquhar’s and Stonepeak’s takeover bid, open to higher offer

A $300m bid by Atlassian billionaire Scott Farquhar and private equity player Stonepeak has been rejected but Genex has left the door open to a higher offer.

Atlassian co-founder Scott Farquhar at his office in Sydney. Picture: Justin Lloyd

Genex Power has rejected a takeover bid led by Atlassian billionaire Scott Farquhar on valuation grounds but left the door ajar should the consortium return with a higher buyout offer.

Mr Farquhar’s investment fund Skip Capital, headed up by the tech executive’s wife Kim Jackson, made a 23c a share offer in cash with private equity partner Stonepeak Partners on July 25 after building up a 19.9 per cent stake in Genex in the prior week.

However, Genex said on Monday that its board had unanimously concluded undervalues the renewable energy company and it would not offer due diligence to its suitors despite the tilt being pitched at a 70 per cent premium to its pre-offer closing price.

With an eye to teasing out a higher bid, Genex said it would offer limited due diligence information on a non-exclusive basis and said it had a “highly attractive” future as a renewable energy and storage company.

Genex shares softened slightly on the news, closing down 2.3 per cent at 21c each. They had surged nearly 50 per cent last week after the bid was revealed.

Genex’s main draw is its Kidston renewable energy hub in far-north Queensland which includes a 50MW solar farm, 250MW hydro project, a further 270MW solar development and a 150MW wind farm.

The company is one of the few remaining listed renewable energy companies in Australia following takeovers of rivals including the $2.9bn sale of Tilt Renewables last year to a consortium led by AGL, the Future Fund and QIC.

Stonepeak, which is largely made up of ex-Macquarie executives, has about $US49.3bn of assets under management, and in July last year closed a $US2.75bn fund dedicated to renewables projects.

The group’s portfolio of energy and renewables assets includes onshore and offshore wind and solar assets. Its operational projects and others under construction have a combined capacity of about 500MW, and the firm has an 8GW development pipeline.

Atlassian co-founder Scott Farquhar at his office in Sydney. Picture: Justin Lloyd

Skip along with Mike Cannon-Brookes’ Grok Capital emerged as backers of Genex in March 2021 after first ploughing money into the company’s $115m capital raising.

The Kidston facility, west of Townsville, signed up power giant EnergyAustralia to a 10-year deal to buy power from the facility with two further decade long options available including control of the plant’s operational and dispatch rights. Genex has received a $610m loan from the Northern Australia Infrastructure Facility and counts Japan’s J-Power as an investor.

The ASX-listed Genex bought the old gold mine from mining major Barrick in 2014 for $1 after the facility had been shut down in 2001.

It aims to start up the hydro project in the second quarter of 2025, marking the nation’s first pumped storage hydro project in 40 years.

It already operates a 50MW solar project at Kidston, is constructing a 50MW battery at Bouldercombe in Rockhampton and has a 50MW solar facility operating at Jemalong, near Forbes in central NSW.

The company has retained Goldman Sachs as its defence adviser with Gilbert + Tobin also on board. The bidding consortium is being advised by Jarden and RBC Capital Markets with Allens providing legal advice.

Genex last week also provided a quarterly update to the market, with revenue for the June quarter stronger than anticipated due to higher electricity prices.

Solar farms at Kidston and in Jemalong, near Forbes in central NSW, generated $8.6m in revenue for the company during the quarter, lifting full-year turnover to a record $26.1m.

It was also the first full year of positive operating cash flow, which came in at $4m.