Origin Energy vows to go green, bid or no bid

Origin Energy has declared it can still pull off an ambitious green pivot, even if a contested $20bn foreign takeover doesn’t proceed.

Origin Energy has declared it can still pull off an ambitious green pivot even if a contested $20bn foreign takeover doesn’t proceed, as investors table their votes ahead of a scheme meeting that will seal or sink the deal.

Uncertainty grew over the weekend after Origin’s largest shareholder, AustralianSuper, boosted its stake beyond 17 per cent on Friday night.

It opposes Brookfield and EIG’s buyout, and its voting power could see the transaction scuttled at Thursday’s vote.

Origin chairman Scott Perkins told The Australian the power giant had a very bright future, whether it was listed or privately held.

“The cookie will crumble how the cookie crumbles. But we can say two things, we are confident in the future prospects of Origin and we believe it is in the best interest of shareholders to accept this offer on the table. The two things don’t necessarily go together,” Mr Perkins said.

“In the event the deal doesn’t get up, Origin will continue to have a bright future.”

The comments will be seized on by opponents to the deal, most notably AustralianSuper, which has vowed to use its stake to oppose the transaction.

AustralianSuper’s stance has frustrated Brookfield and EIG, which have accused the superannuation giant of standing in the way of the energy transition.

Brookfield has vowed to invest between $20bn and $30bn to develop 14GW of new renewable energy generation assets, signif­icantly more than Origin’s current plans for some 5GW.

Origin finds itself caught between Brookfield, EIG and AustralianSuper as the two sides clash over the value of Australia’s largest energy retailer and a major owner of generation assets amid a rapid transition away from fossil fuels. Mr Perkins acknowledged the assessments by opponents to the deal, who say the $9.53 a share offer does not reflect Origin’s dominant position in a sector that is undergoing unprecedented change.

But he said uncertainty would remained regardless of whether the Brookfield and EIG offer was approved at the shareholder meeting on November 23.

“The economics of the energy transition are quite uncertain. How we stitch together wind, solar, batteries, transmission that may or may not get built, the timing of Snowy, the regulatory environment that has been quite volatile, what customers are prepared to pay for and get it funded over the next 20 years is quite uncertain,” he said.

Origin Energy chairman Scott Perkins.

While Mr Perkins said the guaranteed premium was more valuable than some future benefit, Brookfield and EIG are struggling to secure the 75 per cent support they need.

AustralianSuper is alone in publicly rejecting the consortium’s offer, but Perpetual – which has a stake of less than 2 per cent in Origin – has hinted that it also opposes the offer.

Brookfield and EIG are widely seen as struggling to meet the necessary voting threshold, but the duo have won favour with retail proxy advisers – a key voting block among Origin’s equity base – indicating victory could still be within reach.

Supporters of the Brookfield-EIG offer insist Origin’s required expenditure on new assets will take a toll on the retailer’s shareholders.

The promise to develop 14GW of new renewable energy generation assets is attractive for Australia as it struggles to achieve its ambitious target of having renewable sources generate more than 80 per cent of the nation’s electricity by 2030.

Mr Perkins said Australia was moving too slowly to meet those targets. “We do need to speed up the trend if we’re going to make 2030 targets, let alone the longer term targets. The speed of a transition needs to accelerate and accelerate quite dramatically,” he said.

While those comments are a boost to the bidding consortium, Mr Perkins stopped short of an unqualified endorsement of Brookfield’s claims of delivering the country’s transition ambitions.

“Brookfield clearly comes to the transition with a proven track record, and that has been unusually recognised by the Australian Consumer & Competition Commission. We have said from the outset that they are a well credentialed bidder but I would not say they are uniquely well credentialed,” Mr Perkins said.

The ACCC cited the capacity of Brookfield to accelerate Australia’s transition to renewable energy for its decision to allow its bid despite competition concerns.

But with AustralianSuper dominating the shareholder registry of Origin, the deal may fall at the final hurdle, though Mr Perkins said business would go on as normal and there would be no hostility towards the super giant.

“We maintain a very constructive and open relationship with AustralianSuper. They have been a very supportive shareholder from the get go,” said Mr Perkins.

“There has been no criticism of the way the company has conducted itself.”