AGL’s green plan is making investors hungry

“I think the market expected it, but the capital required to roll out the transition will be the key factor in its success. From that perspective, it’s a critical element,” he said.


“Funding is the only element that could cause problems in a strategic review. It is important for them to have the funding to implement the results of the strategic review. So it has to be worked out for them, and they have to do it in an efficient way that doesn’t eat into their underlying profits.”

He doesn’t think AGL will have trouble raising the capital, but did note that the financing rates they would have to pay in the current environment could be “inflated” and they would need to work with someone to build the renewable energy buildings in a can introduce very short period of time.

“There are obvious risks associated with building large amounts of renewable energy when other sectors of the economy are striving to do the same. Excellent supply chain management, experienced people and good leadership are required for success,” he said.

Shaw & Partners’ James Gerrish, who recently bought AGL stock, also believed AGL should be able to raise the capital.

“I think there’s a lot of capital out there looking for a home to stack economically but also to promote renewable energy. If they come up with a credible plan, I don’t think they will have the problem of raising capital,” he said.

Lane Crockett, executive director of clean energy solutions at the Sentient Impact Group, which represents a group of investors with $50 million in AGL stock, welcomed Thursday’s announcement and said they look forward to “more to hear the details.” Investor Group of Climate Change (IGCC), representing investors with over $2 trillion in assets under management.

IGCC chief executive Rebecca Mikula-Wright said there is an appetite in the investor community to allocate capital to renewable energy projects and this week’s announcement showed that AGL had been listening to investors.

“The appetite is incredibly strong. I think investors have been asking for it, which suggests there is no shortage of capital, either from Australian or international investors,” she said.

However, Mikula-Wright said that given the global rush to make the clean energy transition coupled with supply chain issues, there may be some issues with mass-produced renewable energy adoption.

AGL Interim CEO Damien Nicks and AGL Chair Patricia McKenzie.

AGL Interim CEO Damien Nicks and AGL Chair Patricia McKenzie.Recognition:.

Morningstar analyst Adrian Atkins said short-term labor and material shortages would be a bigger problem for AGL than raising capital.

“The whole world is trying to follow the same strategy of building lots and lots of renewable energy. We’re not the only ones,” he said.

“We also have delivery bottlenecks due to the COVID lockdowns in China, and there are many production shutdowns in Europe due to the energy crisis. There are bottlenecks in components. And then there’s a very strong demand to buy them, so it’s not entirely clear how quickly we can match that supply,” Atkins added.

In a statement, UBS analyst Simon Mitchell said he expects more details on AGL’s proposed capital structure and funding strategies when new executives are appointed, and said he remains neutral on the stock amid uncertainty about key executive positions and future capital structure.

However, Morgans analysts noted that while AGL has yet to nail down many specific investment details, it shouldn’t have too many problems raising capital. Credit Suisse has upgraded AGL stock to above average from neutral, noting that it remains strategically valuable for partners looking to invest in the energy transition.

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Brian Lowry

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