At the start of 2022, it wouldn’t have been a surprise to any investor involved in Australian infrastructure to learn that the energy transition would be a major theme.
Most of the major GPs here took at least a look at the sector in one way or another, with the biggest hitters like Brookfield Asset Management and Macquarie Asset Management, along with many others, continuing to deploy capital into the space.
But one wrinkle that most would probably not have seen coming was the entrance of high-net-worth individuals into the sector – as direct investors, not through commingled infrastructure funds.
The term ‘high-net-worth’ probably doesn’t quite do justice to the status of these individuals. Really, we’re talking about the richest of the rich in Australia, the ultra-HNW individuals who occupy the very top positions on the Australian Financial Review’s Rich List each year.
The three that made the biggest splash in 2022 also happened to be the three richest men in the country: Andrew Forrest, Mike Cannon-Brookes and Scott Farquhar.
Cannon-Brookes, co-founder of tech giant Atlassian (along with Farquhar), was first out of the blocks, as his private investment firm Grok Ventures emerged as the junior partner in a consortium spearheaded by Brookfield that attempted to buy the ASX-listed energy generator and retailer AGL Energy.
That bid ultimately failed (with Brookfield turning its attention to AGL competitor Origin Energy a few months later), but Cannon-Brookes kept the heat on, eventually derailing AGL’s planned demerger and succeeding in getting four appointments to AGL’s board despite only having an 11 percent stake in the still-public company.
Farquhar was next, also investing through his private vehicle, Skip Capital. Skip lobbed a bid for ASX-listed renewables firm Genex Energy, alongside Stonepeak, although that transaction is still up in the air at time of writing.
Last but certainly not least was iron ore magnate Forrest. Squadron Energy, a subsidiary of Forrest’s family office Tattarang, acquired renewable energy platform CWP Renewables from Swiss asset manager Partners Group for a sum reported to be more than A$4 billion ($2.7 billion; €2.5 billion).
Perhaps most remarkably, while other potential bidders such as Tilt Renewables, Origin Energy, CDPQ and Iberdrola were being openly discussed in infrastructure circles, no-one seemed to see Squadron’s involvement coming until the deal was announced.
While Forrest’s investment, then, is the only one of the three to actually see a private markets infrastructure deal get over the line in 2022, the activity of the three billionaires collectively signal a shift.
Not only does it demonstrate that infrastructure, and the subsector of clean energy within that, is an increasingly attractive proposition for HNW individuals (ultra-HNW or otherwise) – but it’s clear that, in Australia at least, their influence will now be pivotal in whether the country achieves its broader emissions reduction goals.
It’s been a fascinating period – and 2023 is sure to see more action on this front.