The AGL Energy Limited (ASX: AGL) share price is suffering amid reports Wilson Asset Management (WAM)’s boss is dubious of the company’s demerger.
WAM founder, chair, and chief investment officer Geoff Wilson reportedly flagged the split could diminish funding for future decarbonisation.
At the time of writing, the AGL share price is $8.60, 0.35% lower than its previous close.
The stock has been in the red most of Monday. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has tipped lower in recent hours. Right now, the index is recording a 0.1% dip.
Let’s take a closer look at why the leader of the $5.4 billion investment house is against AGL’s planned split.
AGL share price falls on Monday
The AGL share price has struggled through Monday. Its suffering comes amid news Geoff Wilson is against the company’s demerger plan.
The split will see AGL’s energy retail business in the hands of AGL Australia. Meanwhile, Accel Energy will run its energy generation business.
According to The Australian, the WAM boss expects that, by splitting in half, AGL would create “two smaller weaker entities [with] little financial capacity to drive decarbonisation”.
My thoughts are that an un-merged AGL would have the financial ability of leveraging its 4.5 million customers to give offtake certainty while using its balance sheet and the green bond markets to lead investment, with a partial recycling of capital into infrastructure funds once project are approval [sic] and construction risks are resolved.
Geoff Wilson as quoted by The Australian
Wilson also told the publication that, aside from Powering Australian Renewables’ (PowAR) acquisition of formerly ASX-listed Tilt Renewables, AGL has forked out “virtually nothing” to develop renewable energy since financial year 2018. AGL has a 20% stake in PowAR.
It’s a similar story to that preached by Atlassian Corporation (NASDAQ: TEAM) boss Mike Cannon-Brookes. He’s leading the push against the demerger.
As The Motley Fool reported earlier, Cannon-Brookes believes Labor’s federal election win could pressure the company to ditch the demerger in favour of lowering emissions.
However, Macquarie Group Ltd (ASX: MQG) research reportedly tips AGL could benefit from the change in government.
It found Labor’s $20 billion Rewiring the Nation plan could benefit the energy company, reports the Australian Financial Review. Reportedly, Macquarie is flagging policies to help develop renewable energy like solar and hydrogen as potential wins for AGL.
The post AGL share price struggles as WAM boss slams demerger plan appeared first on The Motley Fool Australia.
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More reading
- What might an ‘election won and lost on climate’ mean for AGL shares?
- Here’s why AGL shares hit the headlines again on Friday
- Why have AGL shares been getting so much love on Tuesday?
- Here are the 3 most heavily traded ASX 200 shares on Tuesday
- AGL share price bounces back amid latest demerger opposition
Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Atlassian. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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