AGL Energy Limited (ASX: AGL) shares are drifting lower on Wednesday.
At the time of writing, the energy giant's shares are down slightly to $11.04.
What's causing the weakness in AGL shares?
This appears to have been driven by news that the company's largest shareholder has been selling down its stake.
According to the release, Grok Ventures recently sold approximately 5.85 million AGL shares in two tranches for a total consideration of approximately $48 million.
The first tranche of 3.85 million shares was sold for an average of $8.20 per share, whereas the second tranche of 2 million shares was sold at $8.28 per share.
Grok Ventures can't be accused of selling at the top, though. The AGL share price has since climbed approximately 33% from these levels, which means these shares would now have a market value of approximately $64.4 million.
Why the sale?
Grok Ventures' CEO and CIO, Jeremy Kwong-Law, revealed that the sale was for portfolio rebalancing purposes. He also highlights that the investment firm remains positive on the company's outlook and remains its largest shareholder despite the sale. Kwong-Law explains:
Grok Ventures recently sold a small parcel of shares and entered into a cash settled equity derivative to hedge a portion of our stake in AGL. The net impact is reducing our relevant interest in AGL by less than 1%, and increasing our short position by 2%. Grok remains AGL's largest shareholder and we continue to view AGL as a high conviction investment in our portfolio.
As a prudent and disciplined investment company, we have decided to rebalance our portfolio to enable us to pursue other exciting climate technology and renewable energy investments. This small sale of shares should not be seen as a broader divestment plan or change in our focus. Even after the sale, AGL remains Grok's largest holding in its portfolio.
Our expectation of the company remains the same – to deliver clean, cheap and reliable energy to customers.
Both parties may need to do some extra work on the "cheap" side of this expectation, though.
