Gas pipeliner APA to raise $750m for Alinta buy

afr.com:

APA Group is seeking to raise $750 million in new equity to help fund the acquisition of remote power assets from Alinta Energy in its biggest move yet into the electricity sector, opening up a new avenue of growth.

The new shares will be sold at $8.50 apiece, an 8.2 per cent discount to Tuesday’s close, to institutions and existing investors. APA shares were placed on a trading halt before the sale.

The deal, first reported inThe Australian Financial Review, will be $993 million funded by debt, APA said in a statement on Wednesday. It is worth $1.72 billion including debt, and came as APA posted a 10.4 per cent gain in bottom-line profit for the full year.

APA Group CEO Adam Watson in Sydney ahead of the earnings report. Dominic Lorrimer

The acquisition is expected to increase free cash flow in its first full year of ownership. APA left its guidance for distributions this coming year unchanged at 56¢ a share, marginally higher than for 2022-23 but lower than UBS was expecting.

Chief executive Adam Watson said the acquisition of the 543-megawatt portfolio of assets “delivers APA a significant new growth platform in the attractive remote-grid energy sector” and directly links with the company’s focus on customers in the resources sector.

“The acquisition is expected to deliver positive immediate and long-term benefits to security holders, and complements our existing assets in Western Australia,” he said.

“It allows us to leverage our existing skills in operating large-scale gas, renewables and storage infrastructure, and provides the opportunity to capitalise on the increasing need for reliable, affordable and lower-emissions energy as the resources sector continues to decarbonise.”

The portfolio of assets being acquired