Z Energy has agreed to acquire a 70 percent stake in spot-based electricity retailer Flick Energy as part of its strategic investment in alternative fuels and mobility.
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By Gavin Evans (BusinessDesk)
The country’s biggest fuel retailer has agreed to invest $46 million in the four-year-old power retailer. It will inject $15.6 million of new equity for a 22 percent interest. It will then pay an additional $30.4 million for 48.1 percent of the existing shares.
Board changes will be made in the next quarter to reflect Z Energy’s major shareholding. Z director Steve Reindler today resigned from the Meridian Energy board with immediate effect.
Wellington-based Flick offers customers electricity based on half-hourly wholesale rates plus a margin. It supplied about 24,200 customers at the end of July, according to Electricity Authority data. After growing rapidly from 2014 through 2016, its growth slowed during the past two years as low South Island hydro levels increased spot prices.
“We view this as a partnership that brings together Flick’s start-up mentality, differentiated offer, technology and talent, along with Z’s innovation and marketing capability, operational scale and resources,” Z Energy chief executive Mike Bennetts said in a statement. The partnership with Flick also reflects the company’s commitment to a lower-carbon economy, he said.
Flick joined the Electricity Authority register of retailers in November 2013. It reported revenues of $43.4 million in the year ended March.
The company’s major shareholder is Gisborne-based Eastland Group, which operates the region’s electricity network, port and airport and has interests in geothermal and hydro generation. It currently owns almost 23 per cent of the business and is remaining a shareholder.
Other investors include Evander Management and Angel HQ, private investment funds and staff, including founder and chief executive Steve O’Connor.
O’Connor said the capital and expertise Z Energy brings to the partnership will enable the company to develop more products, faster.
Z Energy said the purchase will be funded from existing credit lines and won’t impact current earnings or expected dividends. It is expected to add to group earnings from the 2021 financial year.
The shares last traded at $7.40, and have declined 3.5 percent so far this year.