23/10/2018 - 12:10

Infratil weighs-up Perth Energy sale

23/10/2018 - 12:10

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New Zealand-based investment group Infratil is considering selling its majority stake in local electricity provider Perth Energy, which recently returned to profit after running at a loss for the past three years.

Perth Energy owns and operates the 120-megawatt Kwinana Swift power station.

New Zealand-based investment group Infratil is considering selling its majority stake in local electricity provider Perth Energy, which recently returned to profit after running at a loss for the past three years.

ASX-listed Infratil, which holds an 80 per cent stake in Perth Energy, said it had appointed Gresham Partners to complete a strategic review of its investment in the energy retailer.

Infratil will engage with market participants over the coming months to consider proposals which may include sale or other options,” the company said in a statement.

“The strategic review will assess all options with a view to maximising value for all stakeholders. It is expected that this process will be concluded within six months.”

Perth Energy owns and operates the 120-megawatt Kwinana Swift power station, with the company supplying power to about 2,500 businesses in Western Australia.

Infratil has held an interest in the energy company since 2007, with Rod JonesHoperidge Capital also holding a stake in the business.

Perth Energy reported a $5.8 million loss in underlying earnings in the year to March 2018, on retail revenue of $245.8 million and generation revenue at $29.8 million.

Last year’s result was an improvement on 2017, when the business posted a $14.1 million loss.

In its 2018 annual report, Infratil said Perth Energy had returned to profitability in the second half of the year following a difficult period.

“Instrumental in this turnaround has been a restructuring of Perth Energy’s wholesale supply arrangements, a closing out of unprofitable legacy customer contracts, and a revitalised sales team focused on dual fuel (electricity and gas) sales to the small and medium enterprise market and large commercial and industrials,” Infratil said.

“The business is well placed to take advantage of a likely reduction in the retail contestability threshold that will materially expand the available market.”

Infratil said deregulation of the WA energy market had been a slow process, which had hindered the business. 

The annual report also attributed a book value of $63 million to the Perth company.

Perth Energy reported positive underlying earnings in 2016 ($2.9 million) and 2015 ($14.1 million), though it incurred a bottom-line loss in 2016, 2017 and 2018.

Sydney-based Steven Fitzgerald is Perth Energy’s chairman, while Infratil chairman Roger Crawford and Hoperidge director Jon BIesse are non-executive directors.

Rod Jones’ son, Shane Jones, is also a director of the company.

Shares in Infratil last changed hands at $3.15 each.

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