Renewable Energy: New investor blows into Windlab with $68m offer

A Sydney renewable energy investor has lobbed a $68m bid at struggling wind farm builder Windlab (ASX:WND).

Federation Asset Management Holdings, an outfit that bills itself as aiming “to be Asia-Pacific’s leading investor in renewable energy, health and education real estate”, offered $1 a share, a 38 per cent premium to the last close of 72c.

The offer is via a scheme of arrangement, meaning it’ll need to be approved by the board and shareholders, but is conditional and non-binding.

The offer has Windlab board support.

The bid is opportunistic as Federation jumped onto the share register in September, just after Windlab announced a strategic review, buying 18.43 per cent.

Stephen Panizza from Federation Asset Management outlined in November why the investor liked the Windlab story — exposure to the super-fast African market.

Windlab has some good assets: in its half yearly presentation Windlab said it had completed over 1 billion megawatts (MW) in wind generation projects and had a total pipeline of 7.7 billion MW.

And analysts like Green Energy Markets director Tristan Edis have in the past told Stockhead that Windlab’s 30MW Kiata farm was one of the best performing in the state.

Yet Windlab stock has been on a downhill run since it listed in 2017.

In November 2018, the stock sank after it lost its only investor in a Queensland wind farm project due to now-notorious grid connection risks.

UK investor InfraRed Capital Partners pulled out of a 106MW Lakeland Wind Farm project south of Cooktown, Queensland, saying it couldn’t price risks associated with the project’s grid connection, including risk of network losses and risk of curtailment.

Grid connection risks have become a major industry problem as the energy market operator struggles to balance a large number of renewable energy connections in areas where the electricity grid infrastructure is not capable of handling them all.

The company launched a strategic review last year “to close the value gap between the price of Windlab’s listed securities and the board’s view on the underlying value”.

One of the early outcomes of the review is that Windlab has left the North American market.

It shortly followed that with news its flagship Kennedy Energy Park in north Queensland would be delayed, after the contractor building the site was not able to deliver a generator performance standard model in time, a critical detail needed to register the project as compliant.

It’s now taking the contractor to court over invoice disputes.

In other ASX renewable energy news:

Software company Gentrack (ASX:GTK) has downgraded full-year guidance to $NZ8-12m ($7.7-11.5m) after being buffeted by difficult conditions in its utility markets. In the UK and Australia regulatory price caps on electricity, combined with competitive market conditions, have led to reductions and deferrals of IT investment. This has impacted Gentrack’s sales pipeline to a greater degree than previously expected, the company said.