Brookfield, MidOcean agree to short ACCC extension

The parties have agreed to give the regulator an extra month to review the deal, which is seen as a watershed moment for Australia’s energy transition.

Investment giants Brookfield and MidOcean have agreed to allow Australia’s competition regulator an additional month to assess its $18.7bn deal for Origin Energy in the latest twist to the blockbuster deal.

The extension will ease concerns about a prolonged stand-off between the bidders and the Australian Competition and Consumer Commission, with Brookfield and MidOcean keen to expedite the deal, citing finance deals and the need to invest in renewable energy generation projects. But the regulator has shown no appetite to rush-through the acquisition, especially amid concerns about the impact on utility bills.

The decision of the ACCC is a watershed moment for Australia’s energy transition plans. Should the regulator approve the deal, Australia is likely to accelerate its transition away from fossil fuels.

Keen to satisfy the public interest test of the regulator, Brookfield and EIG said investment in new clean energy would now total between $20bn and $30bn to develop 14GW of new, large-scale generation and storage capacity in Australia.

Artists' impressions of the $600m battery to be built by Origin Energy at Eraring. Picture: Supplied

While Australia has seen a flood of capital committed to the country’s energy transition, few have the depth of pockets of Brookfield, and the lure of a spate of investments will be alluring to a country that is struggling to meet its lofty ambitions.

Australia has set an ambitious goal of having renewable energy generate 82 per cent of the country’s electricity by 2030. But Australia is struggling to keep pace with the retirement of coal.

But in a scheduled update, the ACCC in July said it was focused on Brookfield’s ownership of transmission company AusNet and the ownership structure of the private equity giant, an insight that market participants said hinted that the regulator was unwilling to rush-through the deal despite Brookfield’s undertakings to ring-fence AusNet.

The focus of the ACCC on AusNet had been widely anticipated by the market, but the competition regulator said it had noted that AusNet is Victoria’s principal electricity transmission network, it is one of just five electricity distribution networks in Victoria, and it is one of three gas distribution networks in the state.

Demonstrating its desire for a detailed review, the ACCC had asked to go beyond its allotted 90-days to review the deal. But Brookfield and MidOcean declined the request, insisting it could not afford the delay. A compromise has now been reached for an extra month.

Should it clear the ACCC, the consortium will also need clearance from the Foreign Investment Review Board, but investors believe the competition test is the highest hurdle for the deal.

Origin Energy plans to almost double the Shoalhaven hydro-electric plant’s electric output with new tunnels, below ground piping and other facilities. Picture: Supplied

The extension comes just days after the ACCC rejected ANZ’s $4.9bn bid of Suncorp Bank, on grounds it would further diminish competition and lock in a “live and let live” banking culture.

The ruling, which ANZ plans to appeal, stirred some concern within Brookfield and MidOcean as to the implications on the bid for Origin.

Sources close to the bidders said the Suncorp ruling could be interpreted as a default reluctance from the ACCC to sign-off on mega deals, but they said the regulator may also be unwilling to block two deals in quick succession.

Originally published as Brookfield, MidOcean agree to short ACCC extension