Bankers work on AustralianSuper block in Origin Energy deal

AustralianSuper reinforced its opposition to the sweetened deal by increasing its Origin Energy holding to just under 15 per cent.

Investment bankers working on the sale of Origin Energy to Brookfield and EIG are believed to be focusing all their attention on AustralianSuper, as they stand to lose about $50m in fees on the transaction if it fails.

It’s been a harrowing few weeks for advisers that have worked to deliver an 8 per cent increase in the offer to Origin Energy, only for largest shareholder AustralianSuper obstruct the transaction, despite the additional $1.2bn on the table taking the price tag to $16.4bn.

The focus at the weekend was on convincing the Lazard-advised AustralianSuper to change its stance.

It is earlier understood the country’s largest superannuation fund declined the opportunity to be part of the deal, but that might change if terms are improved.

AustralianSuper reinforced its opposition to the sweetened deal by increasing its Origin Energy holding to just under 15 per cent, from 13.67 per cent, on Thursday.

Whether it amasses more shares to secure a 19.9 per cent blocking stake is anyone’s guess, but the view around the market is that the shareholder vote on the transaction now looks almost certain to fail, with 75 per cent of shares voted in favour needed to succeed.

Origin Energy’s advisers are Barrenjoey and Jarden, while Brookfield and EIG’s are Citi, JPMorgan and UBS.

The latest situation is symptomatic of what’s happening across the market, where activist investors are blocking large buyout deals valuable in investment banking from completing.

As a result, bankers are working on lots of share raids for clients, where they are creating blocking stakes, but the fees are nothing like what they make on equity raisings or company sales.

A raid generates about 0.5 per cent in fees on the value of the share transaction, so buying a $200m holding can make a bank $1m. Fees paid by Origin’s suitor if the deal succeeded were believed to be in about $30m.

Macquarie Capital carried out the raid for AustralianSuper as a relationship-building exercise.

In the past two years, activist investor Mike Cannon-Brookes upset Brookfield’s attempt to buy Origin rival AGL Energy, Albemarle’s plan to buy Liontown Resources was killed by Gina Rinehart gaining 19 per cent of the stock, while SQM’s plan to buy Azure Minerals is hanging in the balance after Mrs Rinehart and Chris Ellison have raided the stock to become substantial shareholders.

It’s not the best environment to be missing out on deal fees, what with the market shut for initial public offerings, and the weak economic conditions.

Feeling it acutely will be Barrenjoey and Jarden, which only launched in 2020.

DataRoom understands that each bank is up for a fee of $10m if the Origin buyout succeeds. If it doesn’t, the company only reimburses their expenses.

Potentia walked away from target Tyro Payments and Jarden was the bidder’s adviser, while Barrenjoey worked for Albemarle bidding for Liontown.

Its other deals, including a purchase by Transurban of Melbourne toll-road operator Eastlink and ANZ’s $4.9bn purchase of Suncorp, have also been frustrated by opposition from the Australian Competition & Consumer Commission.

The saving grace for Barrenjoey, sources say, has been its involvement on two equity raisings for Star Entertainment at deeply discounted prices, which would have been highly lucrative for the advisory firm.

Jarden’s speculated partial selldown of its wealth unit is timely, with the deal estimated to deliver a payment of about $NZ60m ($55.3m) back to the Australia and New Zealand advisory unit, although Jarden declines to comment.

Jarden is in talks with NAB about merging NAB’s New Zealand-based JBWere and Kiwi Saver operations with its own wealth business.

Pacific Equity Partners would inject about $NZ200m-$NZ250m into the venture that would be about 48 per cent-owned by New Zealand’s third-largest wealth manager JBWere, 30 per cent by PEP, with Jarden the owner of the remainder.

On Friday prolific dealmaker Macquarie Capital reported a fall in net operating income to $1.22bn, compared to $1.29bn in the previous six months.