SYDNEY (Reuters) - Australia’s biggest private equity firm Pacific Equity Partners (PEP) plans to buy off-grid energy producer Zenith Energy Ltd (ZEN.AX) for A$150.9 million ($99.59 million), sending shares in the target company soaring.
The buyout, which both parties said in a joint statement they had agreed on, builds on PEP’s holdings in the energy market and represents a doubling of Zenith’s market valuation since listing three years earlier.
The cash purchase would be “an excellent outcome for our shareholders, employees and stakeholders”, said Zenith Executive Chairman Doug Walker in the statement.
“PEP has a strong history in backing management teams in the remote power sector and with the additional capital firepower PEP can bring to Zenith, we are highly optimistic about the company’s future growth,” said PEP Managing Director Andrew Charlier.
Among other energy deals, PEP was involved in a joint venture which in 2018 bought a smart metering company from Australian energy giant Origin Energy Ltd (ORG.AX) for an undisclosed sum.
Shares of Zenith jumped 43% to as much as 99 Australian cents in early trading on Monday, just short of PEP’s offer price of A$1.01 per share as investors left room for the possibility of the sale falling through. That defied a broader market sell-down of 5% following a drop in oil prices.
For Zenith, the sale marks a quick profit for investors after an initial public offering (IPO) in which the company sold shares at 50 cents each in 2017. Executive Chairman Walker still holds a stake of one-sixth of the company, according to Refinitiv data.
The company said its board would recommend shareholders vote in favor of the deal at a meeting to be convened in the coming months. They expected the sale to be to wrapped up by mid-year.
Zenith, which sells customized off-grid power generation systems to customers in remote locations, has more than 10 power projects, including hybrid ones, related to diesel, gas, hydro and solar modes around Australia.
Reporting by A K Pranav in Bengaluru; Editing by Peter Cooney and Christopher Cushing