Barclay’s bull or Pearce take? Aussie green energy plays are attracting global investor interest

Each week, corporate advisory firm Barclay Pearce highlights the key trading themes of the week, along with which companies and sectors Stockhead readers should be keeping their eye on.

Most investors are aware of the broader tailwinds stemming from the renewable energy transition.

But while concepts such as net-zero emission targets are now widespread, it will still be up to individual companies to prove out their business models and take advantage of the shift.

In that context, green energy companies were in focus in this week’s catchup with Trent Primmer, Head of Trading at corporate advisory firm Barclay Pearce.

The firm is working with a number of pre-IPO companies in the space that are looking to access public capital markets to fund their next stage of growth.

Global interest

And notably, Australian companies in the space are finding increased levels of interest from global investors, even at an early stage of development.

Primmer highlighted the example of Barclay Pearce client Verdant Earth Technologies (formerly Hunter Energy).

Owner of the Verdant power station in the Hunter Valley, VET is in the process of recommissioning it to operate solely on waste biomass with net-zero emissions.

In the wake of interest from US investors, the company is now eyeing off a listing on the Nasdaq.

“There was a massive amount of interest when we were handling the pre-IPO phase, and a lot of overseas were approaching us to assist in handling that IPO,” Primmer said.

“I think there’s been a shift but it’s only over the last 12-24 months that investors have started to take it more seriously. And I think there’s now a real buzz globally for renewable energy,” he said.

On domestic shores, Primmer flagged the pending ASX listing of renewables company Infinite Blue Energy which is developing the Arrowsmith green hydrogen project in WA.

But as part of the green energy shift, Primmer said Verdant is unlikely to be the only Australian green energy play to tap overseas markets

And Primmer said Verdant is unlikely to be the only Australian green energy play to tap overseas markets.

“If you’re at the back end of the IPO process and you’ve got a broker in one of those global markets that wants to take the company to IPO…if it means you can raise more funds at a better multiple then why wouldn’t you,” he says.

“Our market’s already run hot in a lot of areas, and in Australia you’re targeting a smaller pool of (pre-IPO) investors. Whereas with that market overseas you’ve got a larger pool of high net-worth investors, and you’ve probably got a higher chance of landing a cornerstone investor as well.”

Watch those rates

Elsewhere, Primmer said Barclay Pearce remains committed to the commodities thematic as central banks face a delicate policy challenge to manage the post-COVID economic rebound.

The US Fed has brought forward its rate-hike timeframe, but still isn’t expecting to raise rates until 2023.

For its part, the RBA continued to flag 2024 as the rate-rise year in its policy announcement yesterday.

But as inflation rises through the middle of the year, it remains to be seen whether markets continue to view the increase as transitory.

The in-house view at Barclay Pearce is that central banks are “continuing to underestimate inflation and the roll they’re playing bringing prices higher”, Primmer said.

And in that environment, he’s still bullish on the broader commodities complex in the second half of the year.

“We think gold be a beneficiary in that environment as an inflation hedge if CPI continues to rise above (US Fed) estimates,” he said.

He also flagged ongoing strength in iron ore, citing a recent Goldman Sachs report which forecast prices of US$220/t.

“Chinese steel mills are still posting strong margins. And for the copper thematic we really like Hot Chili (ASX:HCH) in the small cap space,” Primmer said.

And in energy markets, Barclay’s still expects oil to push back towards the $100/barrel mark.

“We’re still bullish on commodities in general, and we expect base metals to push back toward those records they’ve set over previous months,” Primmer said.

The views, information, or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead.

Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.