Rebuffed suitor Brookfield purchases small stake in Australia's AGL Energy

Canada's Brookfield Asset Management has bought a 2.6-per-cent stake in AGL Energy, becoming the No. 4 shareholder just over three months after being spurned in a A$5.4-billion ($4.8 billion) bid for Australia's beleaguered top power producer.

AGL said on Thursday that a unit of Brookfield Asset Management had bought 17.2 million shares as of June 24, adding that the size of the stake could have changed since then. Brookfield Asset Management declined to comment on the stake or its intentions.

Shareholder holdings are typically not publicly announced if they are below five per cent.

Refinitiv data shows the 2.56-percent stake ranks Brookfield Asset Management just outside AGL'S top three investors.

Brookfield's stake purchase comes as AGL Energy is in limbo, searching for a new chairman and chief executive and also working on a new strategy after scrapping a plan to split itself into an energy retailer and coal-fired power producer.

“It's a big black hole at the moment,” said Jamie Hannah, deputy head of investments at fund manager Vaneck, one of AGL'S top 15 shareholders.

“There are a lot of different moving parts going on right now that they need to weigh up.”

AGL Energy ditched the demerger plan two months after rejecting a joint takeover proposal from Brookfield and tech billionaire and climate activist Mike Cannon-brookes, who bought an 11-per-cent stake in AGL and rallied opposition to the company split. AGL plans to update shareholders on its strategy review when it reports annual results on Aug. 19.

There are a lot of different moving parts going on right now that they need to weigh up.

Based on where AGL Energy's shares were trading before June 24, Brookfield likely bought its stake for close to the A$8.25 a share it offered with Cannon-brookes's investment firm Grok Ventures for AGL in March.

“We don't want to see a takeover offer at all at this level,” Van Eck's Hannah said. “We just think there's long-term value — the price is depressed at this level.”