Investment banking boss Matthew Grounds was understood to have had a hands on role in bringing to pass the revised structure for Brookfield and EIG’s Origin Energy proposal, despite his investment bank Barrenjoey working for the target.
Sources say that Mr Grounds was actively involved in negotiations that now see Brookfield and EIG propose to Origin Energy an alternative dual deal structure, with an option of rolling into the offer in a scheme of arrangement and a takeover bid proposed as a back up plan at $9.08 per share if buyout plan gets voted down.
Mr Grounds launched the investment bank Barrenjoey in 2020, poaching high-profile talent from his former employer UBS for his new venture that has about 360 staff.
It is the defence adviser for Origin along with Jarden Group, which also counts former top UBS operatives within its ranks.
Both are investment banking start-ups that stand to lose more than $10m each in fees if the deal does not succeed in a year when investment activity has been weak due to the challenging economic conditions.
It means there has been a lot riding on the Origin transaction - one of the largest buyouts in Australia this year and certainly the most high profile.
Documentation around the deal says the buyout is costing Origin Energy up to $60m, most of which is expected to flow into the hands of bankers and some estimate Barrenjoey’s cut is about $20m.
DataRoom revealed in early November that a takeover bid was being planned for before Christmas after Origin Energy made clear its intentions to vote against Brookfield and EIG’s offer, which had been sweetened to $9.53 a share from the agreed offer earlier this year at $8.91 as energy prices - and profits for Origin - soared.
Following US and Australian dollar currency movements, the offer is now worth $9.43 a share.
But in a further twist to the latest developments, shares in Origin Energy’s rival AGL Energy were down almost 5 per cent on Thursday before closing down about 3 per cent on the back of the government’s recently announced Capacity Investment Scheme, where the government will no longer deal with energy retailers for the development of new renewable energy infrastructure but infrastructure developers directly.
An offer for Origin that is 4 per cent less than what is on the table would be about $9.05, so shareholders initially looking to back out of the deal may now have a change of heart.
Origin Energy’s share price on Thursday closed 1 per cent lower to $8.33.
Other bankers working on the transaction are Citi, JPMorgan and UBS, who are advising the suitors, while Lazard has been advising AustralianSuper.
Mr Grounds previously ran UBS Australia and New Zealand operations before moving to launch his own firm and is known for his influence among high profile figures within corporate Australia.
Origin Energy’s chairman is former high profile Deutsche Bank investment banker Scott Perkins.
Some in the market on Thursday were describing the revised offer as a clever structure that will put pressure on shareholders to vote in favour of a deal when they regroup to vote next month.
AustralianSuper, however, with 17.5 per cent of the stock, is against the deal with the belief that it undervalues the target.
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