Shares in renewable power utility Infigen Energy ended square yesterday at 70 cents after the company tried to play down swirling takeover talk from last week.
Infigen has held what it calls “exploratory and preliminary” talks with asset management giant Brookfield after the Canadian firm took a 9% stake in the wind farm operator.
Infigen chairman Len Gill said in a statement to the ASX on Monday that Brookfield’s interest was long term but that the purchase was not necessarily a precursor to a takeover.
“Brookfield can clearly bring significant value to our business because of their global experience in the renewable energy sector. They indicated their support for Infigen Energy and its business strategy and a willingness to assist us to identify options to create value for all security holders through growth,” Mr Gill said.
“While obviously reserving their rights to alter their views in the future, particularly if a third-party proposal were made, they have no current intention of making a takeover offer for Infigen Energy," Mr Gill said.
Nonetheless, AAP reported that RBC Capital markets analyst Paul Johnston believes some kind of move could be in the pipeline. "While acknowledging Brookfield’s comments, we still believe the chances of corporate activity involving IFN has increased significantly," Mr Johnston said.
"Other potential acquirers of IFN are likely existing merchant utilities and energy companies given IFN’s merchant exposure and increasingly vertically integrated nature of its operations.".
According to its website (https://www.infigenenergy.com/about-us/) Infigen currently generates 557 megawatts of electricity across NSW, SA and WA., with another 113 MW under construction in NSW and plans underway to enter Victoria and Queensland.
Mr Johnston said Brookfield, with about $US250 billion ($A350 billion) of global infrastructure and alternative assets under management, could lower Infigen’s finance costs and increase its access to capital.
"We take this to mean that Brookfield separately may look to partner with IFN in investing in new renewable energy projects or investments," Mr Johnston said in a note on Monday.
“Infigen notes market speculation around an M&A transaction but advises that Brookfield has stated that, while obviously reserving their rights to alter their views in the future, particularly if a third party proposal were made, they have no current intention of making a takeover offer for Infigen Energy, Mr Gill said in yesterday’s statement.