The focus is increasingly narrowing on Lazard as being the adviser of choice for the country’s largest superannuation fund, AustralianSuper, over its negotiations with Origin Energy buyers Brookfield and EIG.
As earlier reported by DataRoom, AustralianSuper is understood to have hired an investment bank as part of its attempts to extract a higher offer out of EIG and Brookfield for Origin Energy, the largest energy retailer in Australia prospering on the back of the soaring cost of power.
AustralianSuper owns 13.68 per cent of Origin after recently increasing its stake by just over 1 per cent and will have a highly influential position in the shareholder vote on November 23 to approve the agreed offer that values the company at $8.91 per share, or $16bn, when it landed some months back.
DataRoom understands that the suitors are working on a higher bid, but when it eventuates, at what price and whether it is enough to appease key shareholders is unclear.
AustralianSuper counts Melbourne as its headquarters; the same city that is the base of the head of Lazard Australia, Andrew Leyden, who is considered one of Australia’s top infrastructure and energy experts in investment banking.
Lazard did not comment.
While Origin’s board has urged its shareholders to accept the deal on the table, cautioning on the heavy cost of transitioning the business to renewable energy in the future, key shareholders take a different view, including AustralianSuper, which believe that the company’s soaring earnings amid an environment of higher oil price linked to the war in the Ukraine warrants a better deal.
Market observers say that should Lazard be there for the superannuation fund, as is the latest talk in the market, it will be earning its advisory fees through providing insight around Origin’s valuation and intelligence on other capital transactions in the private market worldwide.
When it comes to valuation with Origin, there’s been much focus on British conglomerate Octopus Energy that has grown rapidly from its foundations as a technology company and which Origin purchased a 20 per cent stake in for $700m during May 2020.
Another transaction involving former US vice president Al Gore a year later to buy into Octopus valued the company at more than £3bn ($5.8bn), pushing Origin’s interest beyond the $1bn level.
Brookfield and EIG’s agreed offer to buy Origin earlier in the year involved a payment of $A5.78 and $US2.19 per share to reflect exposure to its Australian Pacific LNG project.
After the payment of dividends and compensation for time lag, it’s estimated to be worth $8.81 per share.
Shares are trading at $9.18, indicating the market expects a higher offer is on its way.
To get over the line, there needs to be 75 per cent of shares voted in favour of the transaction when the vote happens on November 23.
Working for Origin are Barrenjoey and Jarden, while its law firm is Herbert Smith Freehills.
The bidding consortium is advised by Citi and UBS.
In August, Origin Energy reported a $1bn statutory profit for the year to June 30 compared with a $1.4bn loss in the previous corresponding period.
It upgraded its profit forecast in May to between $950m and $1.2bn earnings before interest, tax, depreciation and amortisation, from $600m to $730m earlier.
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