In 1994, Morrison & Co saw the opportunity to invest during the corporatisation of formerly co-operative owned distribution companies and began accumulating a position in Trustpower, with a gradual move from a minority position to a controlling stake in 2006.
In 2016, Trustpower had assets of over $3.5bn with 1,111MW of installed capacity. On 1 November 2016, Trustpower completed the demerger of the Company's wind and generation assets with the incorporation of a New Zealand listed company called Tilt Renewables. Trustpower has 19 hydro schemes spread across New Zealand with 430MW capacity and a 129MW consented project pipeline and an electricity retail business with over 378,000 customers, 31,000 gas customers and 69,000 telco service customers. Tilt Renewables has 2 wind farms in New Zealand totaling 197MW capacity and 2 wind farms in Australia with 371MW capacity. There is a further 400MW New Zealand consented project pipeline, 105 MW consented wind site in Western Australia, 52MW consented wind site in Victoria with an unconsented option for 40MW of solar.
In April 1994, Morrison & Co saw the opportunity to invest during corporatisation of formerly co-operative owned distribution companies and began accumulating a position in Trustpower (TPW.NZ) with a gradual move from a minority position to a controlling stake
On 1 November 2016, Trustpower completed the demerger of the company’s wind and generation assets with the incorporation of a New Zealand listed company called Tilt Renewables
The demerger was implemented by way of a scheme of arrangement which received overwhelming shareholder support to proceed with 99.06% of votes cast in favour of the demerger at the Special General Meeting held on 9 September 2016
Prior to the demerger, as of 30th September 2016 Trustpower had delivered a 19% return to Infratil over 22 years
Investment rationale and strategy
Following detailed analysis of the long term wholesale electricity price path, Morrison & Co recognised the value of incumbent hydro generation capacity as well as the opportunity for new build and investment and the potential to influence as a sector-specialist active minority investor.
Morrison & Co's initial investment strategy included the implementation of governance and risk management systems, the sale of the distribution business, the acquisition of hydro stations during a period of low wholesale price, acquiring government consents to develop and build new hydro and wind projects and the gradual move from a minority investor to a controlling stake. Trustpower successfully managed consenting, development and the timing of the capital investment programme over this time.
Based on this experience, Morrison & Co recognised the opportunity to capitalise on Australia's large-scale renewable energy target (RET) scheme. Trustpower's experience enabled the successful implementation of a development pipeline and the assessment of other opportunities over the long-term, including the maintenance of long-dated development options, determining contracted revenue options post maturity of PPA's and the assessment of wind farm repowering opportunities.