AGL fires back with $2bn deal

But billionaire could stop plan

AGL Energy, reeling from Mike Cannon-Brookes’ move to block its demerger, has landed its own blow after unveiling a giant $2bn deal with Global Infrastructure Partners to develop its renewables and low carbon business.

AGL has been in talks with partners to establish a scheme called the Energy Transition Investment Partnership, aimed at supporting its coal arm Accel in funding low-carbon developments with a 2700 megawatt pipeline of foundation projects included in the scheme.

The deal hands GIP a 49 per cent equity stake in ETIP, although the deal remains subject to the planned split of the company winning shareholder approval. AGL wants to create two companies, Accel and an energy retailer AGL Australia.

But tech billionaire Mr Cannon-Brookes, who has this week amassed a 11.28 per cent stake in AGL, said he expects the demerger to be voted down at a shareholder meeting on June 15. He said if it was voted down it would force the entire AGL board, led by chairman Peter Botten, to quit. “It would be hard for them to stay in place,” Mr Cannon-Brookes said.

The proposed demerger needs the support of 75 per cent of AGL shareholders at the June meeting and Mr Cannon-Brookes said he is confident enough people are concerned with the economics to join him in blocking the split. “We are at a critical point in Australia’s energy transition and in AGL’s future,” he said. “This is about delivering cheap, reliable and clean energy to millions of families and businesses.

“We believe by keeping the company together, AGL can continue its long and proud history as a pioneer through energy market transitions.”

AGL said it is standing by its demerger plans and had not been contacted by Mr Cannon-Brookes’ family investment group Grok Ventures, which purchased the AGL stake. Grok, has circulated its own missive, saying the split will fail to limit climate change and end up pushing power prices higher.

“Keeping the company together would create more value for shareholders, cheaper energy and an acceleration of net-zero emissions goals,” the letter said.

AGL shares closed down 3.13 per cent at $8.35 on Tuesday. Earlier this year Mr Cannon-Brookes and Canadian investor Brookfield walked away from a takeover bid for AGL after their $7.50 and $8.25 a share tilts were rejected by the board.

AGL’s planned coal offshoot, Accel Energy, aims to develop Loy Yang, Bayswater and Torrens Island into major energy hubs spanning hydrogen through batteries.

Accel and GIP will jointly fund $2bn of equity in ETIP to support the 2700MW pipeline with the remaining funding financed by debt on a project by project basis. “If all the foundation projects in ETIP were to proceed, it would represent an investment of approximately $4.7bn into the future of energy in Australia,” AGL chief executive Graeme Hunt said.