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Mike Cannon-Brookes: Australia’s first inexperienced company raider

Mike Cannon-Brookes was reworked into one among Australia’s first two tech billionaires when Atlassian, the software program firm he co-founded, went public on Wall Avenue in 2015.

Since then the 42-year-old, who’s normally seen carrying a T-shirt and baseball cap, has gained wider recognition in Australia for utilizing his fortune to fight international warming.

Till this 12 months, these efforts had been confined to philanthropic ventures and a collection of standard inexperienced investments. However in February, Cannon-Brookes teamed up with Canadian funding agency Brookfield to bid for AGL, an Australian coal-based utility and the nation’s largest carbon emitter.

Though AGL rejected the offer, the Sydney native this month revealed he had quietly amassed a 11.three per cent stake within the group. Cannon-Brookes says he intends to make use of the stake to pressure the closure of AGL’s coal vegetation, thwarting the corporate’s plan for a demerger that will see them spun off right into a separate firm and run for an extra 20 years.

“The corporate may be very wedded to a sluggish transition — a glacial transition if it’s any transition in any respect — away from its fossil gas producing belongings,” Cannon-Brookes mentioned in an interview. “That’s dangerous for the local weather, it’s additionally very dangerous for his or her economics.”

The billionaire’s focusing on of AGL has reverberated throughout an Australian enterprise world greatest identified for its mining trade, which is beneath mounting stress to curb its personal emissions.

Zoe Whitton, associate at Sydney-based local weather funding and advisory agency Pollination, says Cannon-Brookes’ local weather shareholder activism is a primary of its sort in Australia.

“I’m personally not conscious of there being one other case that’s received the overlay of activism that we’ve received right here, however is fully local weather change-focused,” mentioned Whitton.

The raid on AGL possibly the billionaire’s boldest transfer but, however it’s consistent with a profession that has mixed entrepreneurial chutzpah with a priority for social and environmental points. Cannon-Brookes arrange a philanthropic basis lengthy earlier than he made his fortune.

His profession started within the late 1990s on the College of New South Wales, the place he met Scott Farquhar and the 2 established Atlassian. The corporate, which they received off the bottom with $10,000 in bank card debt earlier than securing enterprise capital backing, develops merchandise that assist software program engineers collaborate.

After making “don’t f**okay the client” one among its rules, Atlassian has discovered success by constructing versatile, open-source merchandise that don’t lock clients into costly long-term licensing contracts.

The corporate’s market capitalisation has climbed from virtually $6bn when it listed to $42bn, making Cannon-Brookes and Farquhar the fourth and fifth richest folks in Australia, in accordance with an annual listing printed by The Australian newspaper.

For now, Atlassian shareholders seem unfazed as Cannon-Brookes juggles working the corporate along with his ambition to speed up Australia’s shift to wash vitality.

Jeremy Gibson, a portfolio supervisor at asset supervisor Munro Companions, which invested within the firm shortly after it listed on the Nasdaq change in New York, mentioned he was reassured by the “depth of administration” at Atlassian, the place Cannon-Brookes and Farquhar are joint chief executives. Cannon-Brookes insists his pursuits past Atlassian don’t intervene along with his “day job.”

Emissions from the AGL Energy power station in Latrobe Valley
Emissions from the AGL Vitality energy station in Latrobe Valley © Carla Gottgens/Bloomberg

Nonetheless, his more and more muscular activism in a rustic the place local weather change stays a polarising difficulty has put Atlassian beneath the highlight.

The corporate has been accused of hypocrisy for paying little or no company tax: it had a tax invoice of simply A$24.7mn in 2020 after paying nothing in 2018. That has given ammunition to critics who say it undermines Cannon-Brookes’ authority when he upbraids the federal government over its local weather change insurance policies.

Atlassian says its low tax invoice is a results of its important expenditure on analysis and growth, spending that beneath Australian legislation could be deducted from taxable revenue.

The corporate’s co-founders stay shut buddies in addition to enterprise companions. In 2018, Cannon-Brookes spent A$100mn on a mansion on Sydney Harbour subsequent door to Farquhar’s sprawling property.

However whereas Farquhar has saved a comparatively low profile, Cannon-Brookes’ activism has made him a family title in Australia. He describes watching An Inconvenient Reality”, former US vice-president Al Gore’s 2006 movie about local weather change, as a “life arc” second.

Though the failed bid for AGL is his most eye-catching intervention, Cannon-Brookes has already ploughed a few of his fortune into inexperienced investments by way of Grok Ventures, his household workplace. They embrace Solar Cable, an bold plan to construct a 20 gigawatt photo voltaic farm in Northern Australia and export electrical energy alongside an undersea cable to Singapore.

The software program entrepreneur just isn’t the primary billionaire to take up the problem of local weather change. In Australia, mining magnate Andrew Forrest has backed green hydrogen, and has additionally invested in Solar Cable. Microsoft founder Invoice Gates has thrown billions of {dollars} into efforts to develop low carbon applied sciences.

However taking intention at a listed firm has set Cannon-Brookes’ strategy aside. It additionally makes a probably bruising battle virtually inevitable within the run-up to AGL shareholders voting on the demerger plan on June 15.

Cannon-Brookes is dismissive of the demerger, which alongside the coal-based era enterprise would create a retail enterprise that buys vitality from third social gathering turbines and sells it. The demerger would finish the “gentailer” mannequin in style in Australia, during which vitality corporations are each turbines and retailers of electrical energy.

As a substitute, Cannon-Brookes argues AGL ought to stay a single firm, use earnings from its total enterprise to spend money on low-carbon expertise and shut the coal vegetation down sooner.

“If the demerger will get voted down, do you suppose that’s a vote of confidence within the board and administration staff?” he mentioned. “Would it not be tenable for them to remain on afterwards in important quantity?”

AGL, which final week launched a 356-page doc detailing the advantages of the proposed demerger, say Cannon-Brookes has not introduced a critical, detailed various.

With AGL stepping up its personal preparations for the demerger, the result of Cannon-Brookes’ efforts shall be carefully watched as vitality teams the world over wrestle with the way forward for fossil fuel-based companies. Pension fund Conscious Tremendous has voiced considerations about AGL’s proposal, whereas different huge shareholders, together with BlackRock, haven’t joined the general public debate over the group’s future.

Cannon-Brookes, who will spend the subsequent month lobbying AGL shareholders, admits it is going to be an “uphill battle”, however just isn’t brief on self perception.

 “What am I good at? Expertise, enterprise, finance, economics — all of the substances required to make this transition. I’ll put these abilities up towards anybody on the board or administration staff,” he mentioned.

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