Brookfield Renewable Announces Participation in Consortium Proposal for AGL Energy Limited

Brookfield Renewable together with its institutional partners and GROK Ventures (collectively, the “Consortium”) announced its participation in a privatization proposal in respect of AGL Energy Limited (“AGL” or the “Company”), the largest integrated power generation and energy retailer in Australia. The Consortium’s proposal which is subject to due diligence as well as other conditions, is at a price of A$7.50/share which values AGL at an equity value of A$5 billion.

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It is estimated that over US$150 trillion will need to be invested globally through 2050 to drive the decarbonization of energy systems and the global economy. The Consortium has access to capital, and deep operating expertise, particularly in power markets and renewables. With these capabilities and a proven track record, we believe the Consortium is uniquely positioned to execute on a transition-focused business plan that would accelerate the decommissioning of existing thermal assets and build out new clean generation to the benefit of all stakeholders including existing shareholders and local energy consumers.

The Consortium plans to execute on a plan that will require approximately A$20 billion of capital to facilitate the transition of AGL’s generation fleet consistent with the 1.5 degree decarbonization scenario, replacing 7 GW of thermal assets through a build-out of at least 8 GW of clean energy and storage, and we will provide regular reporting to demonstrate progress against our stated targets. In doing so, the Consortium can ensure this proud Australian company has a future in a net-zero world. The plan envisions a vertically integrated energy business that can deliver a transition to net zero, and significant investment in decarbonization creating sustainable regional economic development, enhanced network reliability and local employment.

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The proposed privatization is consistent with Brookfield’s transition strategy of investing in opportunities where we can generate a meaningful contribution to net zero. The capabilities of Brookfield Renewable will also be critical to ensure a responsible and sustainable transition for AGL, that will see increasingly clean power delivered at competitive prices to AGL’s customers. It is a landmark transaction for Grok, which has stated an intention to invest to combat climate change.

Brookfield will pursue this transaction through the Brookfield Global Transition Fund I, which is the largest fund in the world focused on the energy transition, with Brookfield Renewable participating as the largest investor.

The proposal is expected to be pursued through a scheme of arrangement, and in addition to a due diligence condition, is subject to shareholder, regulatory and Board approvals. Regulatory approvals include Australian Competition & Consumer Commission (ACCC) merger clearance, and the Foreign Investment Review Board (FIRB). Brookfield Renewable notes the statement today of the AGL Board of Directors rejecting the Consortium’s proposal with disappointment.

“By combining our access to capital and clean energy expertise, we are capable of helping carbon-intensive businesses transition to more competitive and sustainable futures while making a meaningful contribution to the transition to net zero,” said Connor Teskey, CEO of Brookfield Renewable. “By helping businesses such as AGL achieve their net-zero ambitions through the significant build out of clean energy capacity, we can contribute tangible benefits to stakeholders including net-zero GHG emissions, clean power delivered at competitive prices and new jobs in the green economy, all while generating strong returns for our unitholders.”

Mike Cannon-Brookes, Grok Ventures, said: “This proposal will mean cheaper, cleaner and more reliable energy for customers. It will create over 10,000 Australian jobs and ensure customers don’t bear the brunt of higher power prices – a likely scenario if the proposed demerger happens. AGL accounts for over 8% of Australia’s emissions: more than the current emissions of Australian domestic and international aviation combined, or every car on the road in Australia. As a country, it emits more than Sweden, Ireland or New Zealand. If successful, this will be one of the biggest decarbonisation projects in the world today and show Australia is capable of globally significant projects.”

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