Genex (ASX:GNX) share price frozen on hydro project fund raising

The Genex (ASX: GNX) share price isn't trading today after the renewable power generator announces the final funding of a project.

Mitchell Lawler

Mitchell stumbled upon the concept of investing when in high school, devotedly urging his parents to put some money into a handful of technology companies with increasingly popular products among his demographic – many of which have gone on to great success. It wouldn’t be until 2017, some five years later, that Mitchell became an investor of his own money. Having studied and worked as a mechanical engineer in the building services industry, Mitchell takes a methodical and analytical approach to evaluating businesses. Rather than relying purely on numbers, Mitchell drills beyond a company’s metaphorical mantle to unearth obscure patterns or competitive advantages that would go otherwise unnoticed. His expertise resides within areas such as software, consumer goods, and building services equipment. However, his quest to find quality companies that set the industry standard and flex some degree of an impenetrable position has no limits – small cap to mega cap, cosmetics to healthcare – if it’s an exceptional business it’s on his radar.

Published March 24, 2021 2:48 pm AEDT

The Genex Power Ltd (ASX: GNX) share price isn't going anywhere after the renewable power generation company announced the final capital raising puzzle piece to fund its Kidston Pumped Storage Hydro Project (K2-Hydro).

The Genex share price is currently in a trading halt, frozen at 27.5 cents a share. The company has outperformed the S&P/ASX 200 Index (ASX: XJO) over the last year, with a staggering 175% share price gain.

A dollar sign embedded in ice, indicating a share price freeze or trading halt — Image source: Getty Images

Further funds enable full ownership

Genex announced today that it had secured the final funding needed for the 250MW Kidston Pumped Storage Hydro Project (K2-Hydro). As a result, the full $777 million of financing required for the project has been sourced.

The final piece comes from the launch of a fully underwritten $90 million placement. This allows Genex to construct and operate the project with full ownership. Furthermore, the placement will involve the issuing of 170.1 million new fully paid ordinary shares in Genex. These new Genex shares will be issued at a share price of 20 cents per ordinary share.

The company has also signed an amendment with J-POWER for a further $25 million equity investment in Genex. The remaining funds have already been sourced with a $610 million debt facility from the Northern Australian Infrastructure Facility and a $47 million grant from the Australian Renewable Energy Agency.

Next step

Once all the funds are accounted for, Genex will aim to start construction in April/May 2021.

Genex chief executive officer James Harding commented on today's milestone:

Today's announcement, securing the balance of funding required to take the Kidston Pumped Storage Hydro Project to financial close, is a significant achievement for the Company.

More importantly, to be in a position to finance the project on a 100% equity basis and retain full ownership and control of the asset is a favourable outcome for Genex and its shareholders.

We are now in the final stages of closing out the financing and commencing construction and look forward to updating the market as we complete these milestones over the coming weeks.

Notably, Genex plans for a third stage development for the Kidston clean energy hub. The final chapter entails an additional 150MW wind and solar expansion. Although, we likely won't hear details on it until the completion of stage 2.

Will Genex's share price rise with renewables?

The Genex share price has certainly had a good run over the last year. In fact, much of the renewable space has gained attention in the 12 months gone. Companies like Tilt Renewables Ltd (ASX: TLT) have experienced a surge in share price as private equity floods capital into the sector.

Meanwhile, energy companies like AGL Energy Ltd (ASX: AGL) and Origin Energy Ltd (ASX: ORG) continue to add renewable assets. Even AGL's Chief Operating Officer, Markus Brokhof, recently stated that batteries would be crucial to Australia's energy grid in the near-term. Those comments were in the context of AGL recently proposing a 200MW battery at its Loy Yang Power Station.

If the company can cater to the growing renewable demand, the Genex share price has the potential to grow with it.

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