Very pleased with this news (just in over the weekend). The offer price doesn't reflect the long-term value of the asset, but it is at a significant premium to the current share price and my entry price. In saying that, I feel for many long-term holders here who will have average prices well above 23c and it's for that reason that I think this situation may end up spiralling well beyond 23c/share towards 30c/share. Over the past decade, the 10+ listed ASX renewables plays have gradually been de-listed over time due to takeover offers and M&A, so this has been an ongoing theme. Today, there are really only 2 pure-play ASX renewables companies left and Genex is the absolute standout.
"Private capital’s finally come calling for listed renewable energy assets owner Genex Power, putting it in play with a bid valuing it at more than $500 million. Genex’s board, chaired by former Stanwell Corporation chairman Ralph Craven, is understood to have received the indicative and non-binding bid over the weekend from a group of investors that have already amassed a combined 19.9 per cent stake. Genex Power’s pumped hydro storage project repurposed the abandoned Kidston gold mine. The consortium includes Skip Capital, the private investment fund founded by Atlassian’s Scott Farquhar and his wife, former Hastings Funds Management executive Kim Jackson, and a private equity partner. Genex Power’s board has hired Goldman Sachs for advice and is expected to disclose the offer on Monday morning. The company and its bankers should’ve seen it coming; more than 125 million Genesis Power shares changed hands in two trades late last week, representing about 9 per cent of the company."
"The biggest trade was late on Friday night, when Jarden’s equities desk crossed 86.5 million shares or 6.2 per cent of Genex’s issued equity. Alarmingly, it was at 23¢ a share or a 70 per cent premium to the Friday close. Skip Capital’s understood to have been the buyer, working in conjunction with its private equity backer. Skip already had an 11.2 per cent stake to be Genex Power’s biggest shareholder, prior to last week’s trades. Genex Power owns the flagship Kidston Clean Energy Hub in North Queensland, which involves solar (operating), pumped hydro (under construction) and wind (development) generation, and other solar and battery storage assets in NSW and central Queensland. The company listed in July 2015 and counts Japan’s J-Power as an anchor investor. The takeover interest comes after bids for fellow listed renewable energy plays Infigen Energy and Tilt Renewables, both picked off the ASX-boards in the past two years, and a wave of private M&A deals."
"A bid at 23¢, in line with Friday night’s buying, would value Genex’s equity at about $320 million. Genex Power also had borrowings worth $260 million at December 31, including senior bank debt and funds from Australia’s Clean Energy Finance Corporation and Northern Australia Infrastructure Facility. The questions for Genex Power would be whether to grant its suitor due diligence, and whether there may be a strategic player willing to take on a consortium with a 19.9 per cent pre-bid stake. For Skip Capital, the Farquhar/Jackson family office, it’s the second time it’s been spotted in an attempted public company buyout. The last time was when it teamed up with Washington H Soul Pattinson for a tilt at aged care operator Regis Healthcare in late 2020."
Monday morning will be interesting, to say the least!
Monthly chart, below, from the IPO (2015) till now. I think there is a strong resemblance of value here at a $1 billion enterprise value ($150m market cap) for a company with a portfolio of 100MW in operating assets, 250MW in construction and 520MW in the pipeline (total of circa 870MW). As a comparison, Infigen had 670MW of wind generation assets and 268MW of firming assets when it was acquired by Spanish renewables giant Iberdrola for $835 million in 2020.
But, that's only if you are willing to wait till CY25 onwards when the primary assets start to come online and begin generating strong cashflow. It is a waiting game really; picking up shares at the right time while awaiting the big money to start arriving once this is closer to being a dividend-paying company in the next couple of years. One also needs to be cognisant of any further dilution, although the flagship hydro project is already fully funded.
