The challenge

Palisade Impact is an Australian impact fund, focused on unlisted investments that intentionally target solutions to environmental and social challenges while delivering strong returns.

Rennie was engaged to provide Regulatory Due Diligence to inform Palisade Impact’s investment decision for the acquisition of Energy Locals, an embedded networks business and energy retailer. To support its investment decision, Palisade Impact required an independent view of the current regulatory environment in which Energy Locals operated, an assessment of regulatory reforms and their potential impact on the business, and the identification of regulatory issues.

Our solution

Regulatory analysis and impact assessment

Rennie acted as part of the specialist due diligence advisory team. This required an assessment of the regulatory and reform environments, and the identification of any material issues which would potentially impact revenue or gross margin for the target business. Rennie reviewed the target business’ operations and analysed the applicable regulatory frameworks and reforms to understand current state and potential future state, and the associated impacts.

Our impact

Through our analysis, we identified material issues for Palisade Impact to consider in its investment decisions, supported by rigorous quantitative and qualitative analysis, and clear assumptions.

Our report for executive management provided a detailed view of the regulatory and reform environment in which the target business operates, as well as our analysis and assessment on the issues with the potential for material impacts on the business. This report could be used by our client in the investment decision process and to inform further discussions with other stakeholders.

Key insights

• The embedded network regulatory environment is highly nuanced between different states, and requires regular monitoring to ensure permit and licensing requirements and opportunities are being maintained.
• Some aspects of embedded networks have historically operated within gaps in the regulatory framework. Various governments around Australia are reviewing these frameworks for embedded networks with the objective of providing embedded network consumers with consistent consumer protections to ‘on-market’ customers.
• In particular, governments are responding to instances of adverse consumer outcomes in embedded networks by examining tighter price controls and limits on contract length for embedded network customers.