Perpetual lashes Origin Energy’s $20bn suitors as Brookfield touts local roots

Perpetual is the latest dissenting voice as the Brookfield-EIG consortium attempts to woo enough votes for its almost $20bn takeover of Origin Energy.

The fallout between Origin Energy’s foreign suitors and its major shareholders has deepened after fund giant Perpetual branded comments made by Brookfield as “disgraceful”, heightening the risk of the year’s biggest takeover failing to proceed.

Brookfield and its partner, EIG, are scrambling to secure support from 75 per cent of shareholders for its $9.53-a-share offer for Origin, and the deal’s success is considered dependent on the support of retail shareholders which make up about 30 per cent of equity owners.

Brookfield and EIG have won support from some institutional investors such as Allan Gray, but other heavyweights have yet to publicly divulge their voting intentions.

Perpetual – a large Origin shareholder and an early advocate for Brookfield and EIG returning with a revised higher bid – has not revealed how it intends to vote. But Perpetual head of Australian equities Vince Pezzullo offered stinging criticism of Brookfield and EIG.

“Look at just the response from the bidding parties; some of the comments they made are disgraceful. They don’t own this fight, AusSuper owns this fight – they’re the owners of the company,” Mr Pezzullo told the Fiduciary Investors Symposium.

“I’ve got a real problem with people giving up on their philosophy and discipline. It pays to stick to your philosophy and maintain some form of discipline when you’re investing.

“We don’t need … foreign companies to teach us how to do a transition.”

The comments will intensify uncertainty about the outcome of the vote, and shares have fallen sharply since AusSuper declared its opposition to the deal.

The loss of Perpetual would be a significant blow, but retail shareholders shape as the most likely route for Brookfield and EIG to be successful.

Brookfield Asset Management chairman Mark Carney. Picture: AFP

A vote of Origin shareholders will be held in Sydney on November 23.

AustralianSuper on Monday rejected an invitation to join Brookfield and EIG in their almost $20bn offer for Origin Energy, as the superannuation giant moved to increase its stake and add another twist to one of the country’s largest takeover deals.

In a bid to assuage any concerns, Brookfield head of renewable energy Luke Edwards said the fund was Canadian-based but had deep ties to Australia and therefore understood the responsibility of potentially owning Origin.

“Brookfield has got a really strong presence here in Australia. I’m not sure many people appreciate this but we manage $90bn worth of assets here,” Mr Edwards said.

“We employ about 27,000 people across healthcare, heavy industries and energy related industries so the concept that we are foreign capital is not right.

“Brookfield is Canadian by heritage but we have been here since 2007 – some 16 years – and we are long-term investors.”

AusSuper has increased its stake in Origin to more than 16 per cent, a sizeable opposition to Brookfield and EIG which must secure support from 75 per cent of shareholders in Australia’s largest electricity and gas retailer.

A falling share price will provide incentive for some investors to accept the consortium’s offer, and Mr Edwards said the duo was pushing hard to secure enough votes.

“We’re motivated and we’re working really hard to get the job done. We’re continuing to leave no stone unturned,” Mr Edwards told The Australian.

Brookfield and EIG have won favour with Australian officials for their bid, as they promise to invest between $20bn and $30bn to accelerate the nation’s transition away from fossil fuels.

Brookfield has said it would develop 14GW of renewable energy generation assets – higher than the 5GW that Origin has currently proposed.

The promise is attractive for Australia as it struggles to deliver its ambitious plan of having renewable sources generate more than 80 per cent of the nation’s electricity by 2030.

Mr Edwards said Brookfield was uniquely positioned to deliver the much-needed acceleration in the build-out of renewable energy generation.

“If anyone can acquire origin and transition the business, Brookfield can,” he said.

Origin is leading efforts to engage with individual shareholders, and those efforts have achieved recent success with recommendations from several proxy advisers to support the transaction.

Brookfield and EIG have seized upon the recommendations as evidence that it has momentum for its bid, but, critically, notable institutional investors have yet to reveal their voting intentions.

If the consortium’s bid fails at the shareholder vote, it could return with an off-market bid, which would result in EIG buying Origin and then selling a division to Brookfield.

Industry sources have, however, questioned the possibility of EIG securing the capital needed to fund the transaction.

Origin shares rose 7c, or 0.8 per cent, on Wednesday to $8.57, valuing the company at $14.7bn. The stock hit a year high of $9.32 on October 16.