The consortium led by global funds giant Brookfield Asset Management has jacked up its bid for Australia’s largest utility, Origin Energy, by $1.2 billion and confirmed its intention to spend up to $30 billion to fast-track the country’s renewable energy transition.
The revised offer of $9.53 a share, up from $8.81 previously, follows pressure from institutional shareholders – and some frankly bizarre claims that they could accelerate the transition just as quickly – and is now above the valuation range put on the company by independent experts Grant Samuel.
However, Australian Super, a fund that ranks poorly in the Market Forces “Climate Wreckers” index, because of its exposure to fossil fuel investments, and its support of gas giants Woodside and Santos, said the offer was still not good enough and would vote its near 14 per cent against the bid.
Brookfield needs a 75 per cent support of the shareholder vote.
Brookfield has already won approval from the competition regulator, despite concerns about the impacts of its part ownership of Victoria network company AusNet, mostly because of the bidding consortium’s commitment to build more than 14 GW of new capacity over the coming decade, three times more than Origin planned.
It underlined those commitments in its statement on Thursday announcing the increased offer.
“We believe that for Australia to meet its climate targets, organisations such as Origin need to embark upon an accelerated transition plan,” said Stewart Upson, Brookfield’s head in the Asia Pacific.
“In order to achieve this, the Brookfield Consortium plans to invest A$20 billion – A$30 billion through Origin over the next ten years. Origin’s existing plan is to build 4 GW of renewable energy by 2030, resulting in a slower transition to net zero compared to Brookfield’s proposed investment program.
“With its current funding sources and as a public company, Origin will not to be able to match the level of investment at the scale and speed as it could achieve under Brookfield’s ownership.”
Some Australian super funds were quoted this week saying they had the capital to invest in accelerating Australia’s renewable energy transition, but so far they have shown little if any interest in advancing projects, apart from buying those already complete and with steady returns and contracts locked in.
Upson said Brookfield will be on the front foot to build new projects.
“The combination of Brookfield and Origin in Australia will fast-track significant decarbonisation in the National Electricity Market,” Upson said.
“Consumers will ultimately benefit from an accelerated transition with reliable, lower-risk and lower-cost power. We also intend to support a local manufacturing industry that will make components for the renewables development industry in Australia, creating jobs.”
Brookfield has joined forces with Singapore funds GIC and Temasek, and plans to take control of Origin’s utility business, which includes the country’s biggest coal generator, the 2.88 GW Eraring facility that is currently due to close in August, 2025.
Origin’s LNG business, should the bid be approved by shareholders and by the Foreign Investment Review Board, will then be held by the US-based MidOcean Energy.
The Origin board, which had already agreed to the previous bid, welcomed the increased offer and underlined the fact that Brookfield will fast-track its transition to green energy.
“We believe Brookfield’s ownership of Origin’s Energy Markets business will accelerate the build out of cleaner energy at a speed and scale much greater than Origin’s existing plans,” chairman Scott Perkins said in a statement.
“Brookfield’s publicly stated intention is to invest $20 billion to $30 billion in renewables and storage assets by 2033 so that the majority of Origin’s customer demand is serviced by clean energy sources, and to support Origin’s 1.5-degree Paris-aligned emissions pathway.”
The company plans to hold a shareholder meeting for the takeover in late November, with completion now scheduled for late January.
