LGI’s Capital Raise Highlights Risks Amid Energy Market Volatility
LGI Limited has secured $56.2 million through a fully underwritten institutional placement and a Share Purchase Plan to fast-track its renewable energy projects and expand operating capacity beyond 80 MW. The capital raise underpins the company’s strategic growth in landfill biogas recovery and battery storage solutions amid rising energy market volatility.
- Fully underwritten $51.2 million institutional placement at $3.85 per share
- Non-underwritten Share Purchase Plan targeting up to $5 million
- Funds to accelerate High Conviction Projects in Execution and Development
- Targeting 80+ MW medium-term renewable electricity operating capacity
- Pro forma net leverage ratio to improve from 1.6x to 1.2x post-raise
LGI’s Strategic Capital Raise
LGI Limited, a leader in landfill biogas recovery and renewable electricity generation, has announced a significant capital raise totaling $56.2 million. This comprises a fully underwritten institutional placement of approximately $51.2 million and a non-underwritten Share Purchase Plan (SPP) aiming to raise up to $5 million. The placement price of $3.85 per share reflects a near-zero discount to recent trading prices, underscoring investor confidence in LGI’s growth trajectory.
The proceeds are earmarked to accelerate delivery of LGI’s High Conviction Projects currently in execution, while also providing balance sheet capacity to pursue promising projects in development. This dual focus aims to solidify LGI’s position in the evolving renewable energy landscape and support its medium-term goal of surpassing 80 megawatts (MW) of operating capacity.
Growth Pipeline and Market Position
Founded in 2009, LGI has established itself as a vertically integrated operator in the landfill gas sector, converting biogas into renewable electricity and environmental products such as Australian Carbon Credit Units (ACCUs) and Large-scale Generation Certificates (LGCs). Its diversified revenue streams span site infrastructure management, greenhouse gas abatement, and renewable energy sales.
LGI’s growth strategy leverages increasing regulatory pressure on emissions and the broader energy transition. The company is expanding power generation capacity and battery energy storage systems (BESS) at contracted landfill sites, including key projects at Mugga Lane, Belrose, and Nowra. These projects are expected to add significant capacity, with commissioning timelines stretching into FY27.
Financial Strength and Operational Momentum
Post capital raise, LGI’s pro forma net leverage ratio is expected to improve from 1.6x to 1.2x, with undrawn bank capacity increasing from approximately $19 million to $48 million. This enhanced financial flexibility will enable LGI to accelerate project delivery and pursue additional growth opportunities beyond its current pipeline.
Operationally, LGI has demonstrated consistent growth with a compound annual growth rate (CAGR) of 10% in biogas flows and 8% in renewable electricity generation over recent years. The company anticipates FY26 EBITDA growth of 25-30%, reflecting both organic expansion and the benefits of its capital deployment strategy.
Risks and Market Dynamics
While LGI’s outlook is positive, the company acknowledges several risks including variability in biogas supply, commodity price fluctuations for electricity and carbon credits, operational challenges, regulatory changes, and cyber security threats. LGI has implemented mitigation strategies such as hedging, contract management systems, and robust health and safety programs to address these risks.
Market volatility, particularly in wholesale electricity prices in Queensland and New South Wales, presents both challenges and opportunities. LGI’s strategy to expand flexible generation assets and grid-scale batteries positions it well to capitalize on price fluctuations and support Australia’s energy transition.
Bottom Line?
LGI’s capital raise sets the stage for accelerated growth in renewable energy capacity, but execution risks and market volatility remain key factors to watch.
Questions in the middle?
- How quickly can LGI deliver on its High Conviction Projects to meet capacity targets?
- What impact will evolving carbon credit regulations have on LGI’s revenue streams?
- How will LGI manage commodity price volatility and operational risks amid energy market fluctuations?
