Boost for Brookfield as it fends off fossil fuel investor seeking to derail Origin bid

Global asset management giant Brookfield has received a boost for its consortium’s now $20 billion bid for Australian utility Origin Energy, and its chances of fending off attempts by a leading fossil fuel investor trying to derail the offer.

Brookfield announced on Tuesday that the influential investor advisory group ISS had recommended Origin shareholders accept its newly raised offer for Origin of $9.53 a share.

The recommendation by ISS could be crucial as Brookfield seeks to gain approval from the required 75 per cent of shareholders needed to support the agreed bid.

The LNG business of Origin Energy will be taken up by consortium partner MidOcean Energy, and Brookfield will focus on the utility assets, with a $30 billion plan to build some 14 GW of renewables and storage and fast-track Australia’s renewable energy transition.

But the biggest opponent to the deal is Australian Super, the superannuation giant with more than $300 billion under management and with significant investments in fossil fuel companies, including Woodside and Santos.

In a report in September, Australian Super was singled out by the advisory firm Market Forces for “using the retirement savings of millions of members to support … climate wrecking fossil fuel expansion plans.”

Market Forces was particularly critical of Australian Super’s support for all board proposals at the recent Woodside AGM, and for its increased investment in Woodside, now worth more than $2.5 billion.

“AustralianSuper has failed to use this increased leverage to demand an end to Woodside’s fossil fuel expansion plans,” Market Forces noted in its report, published in September.

“Despite voting against Woodside’s climate plan in 2022, AustralianSuper backpedalled this year by voting with management on every AGM item, including for the re-election of director Ian Macfarlane (the former Coalition energy minister who now heads a fossil fuel lobby group).”

“By throwing its full support behind Woodside’s board, AustralianSuper has signalled its tacit approval of the company’s oil and gas expansion strategy.”

Australian Super holds a stake of more than 13.5 per cent in Origin, which has vast LNG assets and owns the country’s biggest coal generator, Eraring, which is scheduled for closure in August, 2025, but whose life may be extended if it can get funding support from the NSW government.

Australian Super has reportedly being buying more shares on market, which means that Brookfield will need to get support from almost all the remaining shareholders to win the shareholder vote later this month.

It has emerged in recent days that Australian Super had been asked last year if it wanted to be a member of the Brookfield bidding consortium, which now includes Singapore investors Temasek and GIC, but refused.

Ironically, Australian Super is defending its opposition to the bid, saying that Origin is an “energy transition” play. Brookfield argues that Origin is only an energy transition play if it is bought by Brookfield, because the company’s own renewable investment plans are less than one third of those proposed by the US investor.

“They are holding the company hostage, they are standing in the way of other people getting a big cash payment and not having to invest in the (energy) transition going forward,” Luke Edwards, head of Brookfield’s renewable power and transition for Australia, told Reuters in an interview last week.

In a statement on Tuesday, a Brookfield spokesperson said the ISS recommendation represents another independent voice that supports accepting the “compelling and certain value” it has offered.

“Origin investors have a clear choice; to accept $9.53 for their shares which is higher than even the most optimistic view of the independent expert versus taking on the risks, uncertainty, volatility and cost of the energy transition themselves,” the spokesperson said.