Origin Energy’s largest shareholder AustralianSuper, which played a pivotal role in declining a A$20 billion takeover of the country’s leading electricity and gas provider, has expressed willingness to provide capital in support of its transition, according to a report in The Australian Financial Review.
Simultaneously, other stakeholders, including long-time investor Allan Gray, suggested a demerger or an intensified plan for the company's shift to low-carbon energy.
At a meeting in Sydney yesterday, small investors applauded Origin chairman Scott Perkins' announcement that the deal offered by Brookfield and EIG Partners would not advance, leading to a 3.9% decline in Origin’s share price to an eight-month low of A$7.86, significantly below the offer price.
Not enough support
The rejection had been widely expected, with the failure attributed to failed attempts by Brookfield and EIG to rally support for a deal that Australian officials said would rapidly accelerate the country’s transition away from coal.
The consortium’s offer worth around $9.39 a share had required endorsement from at least 75% of Origin’s shareholders, but only 68.9% supported.
Nearly 78% of Origin shareholders cast their ballots, the company said.
"We have never wavered in our belief that the value and future value of Origin is better in the hands of members and other shareholders rather than a private equity consortium seeking to make a quick return based on the proposed scheme terms, and we are pleased that this is the outcome," an AusSuper spokesman said.
New strategy needed
AusSuper, identifying as a long-term investor in the Australian economy, is prepared to "provide capital to assist Origin as it prepares to transition over the coming decades" while prioritising its members' financial interests.
While Perkins signalled a return to "business as usual" for Origin, some institutional investors advocated for a refined strategy post-rejection.
Jamie Hannah at VanEck emphasised the need for more aggressive energy transition targets and funding strategies, questioning AusSuper's potential role in financing.
“Is AusSuper actually going to step in at this point and provide some actual funding or are they going to go to the market, use some of the cash flows and increase the production and pace of their energy transition?” asked Hannah.
Allan Gray portfolio manager Simon Mawhinney proposed separating Origin's energy markets business from its APLNG gas export business, stating, "I think the two businesses can stand on their own two feet and having them separate would go some way to appeasing some shareholders."
New offer, maybe?
Following the rejection, Canada’s Brookfield, despite no immediate plans, expressed intent to evaluate its position based on what it described as “strong” support for its proposal but it signalled no move was imminent.
“Brookfield will evaluate its next steps, if any, with respect to Origin, given the strong level of Origin shareholder support for its proposal and taking into account the potential impact to Origin of the Australian government’s recently announced proposed expansion to its Capacity Investment Scheme and National Energy Transformation Partnership,” a spokeswoman said.
Following Monday’s meeting, Perkins and Origin chief executive officer Frank Calabria maintained that the deal's failure did not necessitate a strategic or board-level overhaul.
Perkins underscored AusSuper's continuous backing, saying, "Throughout this process, from the top of AusSuper they have gone out of their way to reinforce the message that they are supportive of Origin and its people."
Working together
AusSuper’s rejection of the deal underscored its view that Origin’s “highly strategic portfolio of assets” would have been short-changed by the offer.
“With the shareholder vote now finalised, we are looking forward to working with Origin’s board and executive team as they look to execute their strategy and ambition to lead Australia’s energy transition,” a spokesman said.
“There is going to be no shortage of opportunities for co-investment alongside Origin through the energy transition from all parties – the cheaper the cost of capital, the better,” Perkins added.