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Infigen Energy exploring options to realise value

Infigen, which has a market cap of $664 million, said it was "exploring a range of options" but advised there was no certainty a transaction would eventuate. Mr George said the company had approached underbidders in the recent sale of Pacific Hydro, a deal said to be worth $3.2 billion. 

Wind power player Infigen Energy is entertaining a full-blown sale of the company among options being explored in a process that has attracted interest from China and Europe and could yield results in six months.

As revealed in Street Talk, Infigen's adviser Lazard has written to potentially interested parties seeking expressions of interest, with options ranging from funding for new projects through to a sale.

Chief executive Miles George said Infigen was "not leaving any stone unturned" to find a way of participating in the huge growth ahead for the industry.

"There's been a lot of interest from foreign investors and we're keen to see if any of those international parties offer opportunities that may be the best way forward to develop our business."

Infigen, which has a market cap of $664 million, said it was "exploring a range of options" but advised there was no certainty a transaction would eventuate.

Mr George said the company had approached underbidders in the recent sale of Pacific Hydro, a deal said to be worth $3.2 billion. In addition, several new foreign players had entered the Australian renewables sector in recent years, including Beijing Jingneng Clean Energy and France's Neoen.

On target

The former Babcock & Brown Wind Partners has been riding a wave of revived interest in clean energy thanks to the firmer political backing for the 2020 renewable energy target since it was revised last year. Last year's sale of its US business has increased its leverage to growth in Australia, while reducing debt.

Shares in Infigen touched 89¢ last week, their highest since June 2010, and more than four times their August low of 22¢. The stock rose 1.8 per cent to 86¢ on Tuesday.

The target for 33,000 gigawatt-hours of renewable generation by 2020 paves the way for a major expansion of the sector, with more than 5000 megawatts of new capacity needed to achieve it. The price for large-scale renewable energy certificates, or LGCs, which underpin new renewables projects, has risen in response. The price for an LGC, representing 1 MWh, has climbed from over $60 last October to $81.90 last week.

That has added impetus to discussions  regarding potential deals as Infigen seeks to tap into the growth with its limited funding. The company has 557 MW of installed capacity and over 1000 MW of proposed projects with development approval.

"We're in an environment where the activity has to start happening now," one source said. "Twelve months ago there was too much risk around to sink capital into renewable energy projects. That's changed now."

Waiting game

No deal is expected ahead of the July 2 federal election, the outcome of which could further brighten prospects for the renewables sector should Labor prevail with its policy for a 50 per cent renewable energy target and 45 per cent emissions reductions by 2030.

"I see it as either being good or better," Mr George said of the potential election outcomes.

IFM Investors' sale of Pacific Hydro to China's State Power Investment Corp exposed a valuation discrepancy with Infigen's trading value, despite the share price surge. Sources say the Pacific Hydro deal represented a multiple of 15 times forecast earnings before interest, tax, depreciation and amortisation, while Infigen trades at just over 10 times.

Any deal would require a nod from long-standing cornerstone shareholder The Children's Investment Fund Management (TCI), which has a 32.6 per cent stake. But Mr George said that provided a bidder was willing to pay a "reasonable control premium", TCI had indicated it could be a willing seller.


Source: http://www.smh.com.au/busin...

MAY 17 2016
http://www.windaction.org/posts/45061-infigen-energy-exploring-options-to-realise-value
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