By Perry Williams
AGL Energy faces further opposition to its demerger after high profile fund manager Geoff Wilson emerged as an opponent of the split, as billionaire Mike Cannon-Brookes continues to agitate for the controversial restructure to be voted down.
The veteran investor, chairman of the $5bn Wilson Asset Management group, says he is unconvinced by AGL’s explanation for the demerger move, remains concerned over its renewable investment and decarbonisation commitments and keeping it whole would give it greater financial firepower.
“Apart from undertaking the ill-conceived diversion of the Tilt Renewables acquisition, my understanding is that AGL has spent virtually nothing on developing renewable energy since FY2018,” Mr Wilson told The Australian.
“On my reading of the demerger documents unfortunately they spend very little time talking about decarbonisation, and I would expect that by proceeding with the demerger and creating two smaller weaker entities they will have little financial capacity to drive decarbonisation – if that was the AGL’s board’s focus.”
Mr Wilson said keeping AGL intact rather than splitting it into retail and generation units was a smarter course for the company ahead of a June 15 vote.
“My thoughts are that an un-merged AGL would have the financial ability of leveraging its 4.5 million customers to give offtake certainty while using its balance sheet and the green bond markets to lead investment, with a partial recycling of capital into infrastructure funds once project are approval and construction risks are resolved.”
AGL responded on Monday saying the demerger represented “decisive action towards decarbonisation” and will enable AGL Australia and Accel Energy to responsibly accelerate the transition faster than as one company.
Mr Wilson galvanised Australian superannuation investors into a vocal lobby against the Labor’s franked dividend scheme in the last election with some of the credit for the unlikely loss by then opposition leader Bill Shorten given to the dividend imputation policy.
AGL owns a 20 per cent stake in the Powering Australian Renewables venture which paid $NZ2.96bn ($2.75bn) for Tilt Renewables, winning a hotly contested battle for a string of wind and solar farms and a big pipeline of undeveloped projects.
The company has said it holds the largest renewables and storage portfolio of any ASX-listed company having invested $4.8 billion over two decades in renewable and firming generation, and more than 2,350MW of new generation capacity added to the grid since 2003.
While WAM only owns a small stake in AGL through its Strategic Value fund, the Sydney stockpicker has influence given his 120,000 strong shareholder-base, who are mostly self-managed super fund members. AGL has 148,000 small investors who account for over half of the company’s shares.
While Mr Cannon-Brookes and Mr Wilson are not understood to have held talks on his campaign against the demerger, the WAM chairman was among fund managers that attended a presentation run by investment bank Jarden on behalf of the tech titan’s Grok Ventures.
Mr Cannon-Brookes hit AGL with a fresh attack on Sunday following Labor’s election victory saying the split was not aligned with Paris green goals and at odds with a nation wanting stronger climate action.
AGL immediately struck back saying that it shared the ambition for “decisive action on climate” while ensuring affordable energy and would work with the Albanese Government to achieve the twin goals.
The power giant plans to split off AGL Australia, with its 4.5 million customer base, into a newly listed retail-focused company with the current AGL to be rebadged as a coal-dominated generator called Accel Energy.
The split needs approval from 75 per cent of shares voted to proceed.
AGL fell 0.5 per cent to $8.59.
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