A consortium led by Brookfield Asset Management has received approval from Australia’s anti-trust regulator to acquire Origin Energy for approximately $10 billion. This acquisition comes as the consortium’s commitment to investing in renewable energy generation outweighs concerns about competition.
In March, Origin agreed to be acquired by Brookfield and private-equity firm EIG Global Energy Partners in a $9.78 billion deal. As part of the agreement, the consortium plans to split Origin into two entities: Brookfield will acquire its power-generation division, while EIG’s MidOcean Energy unit will take over its liquefied natural gas business.
The Australian Competition and Consumer Commission (ACCC) gave the green light to these plans on Tuesday. Despite concerns about Brookfield’s existing ownership of AusNet, which operates a power-transmission network for Origin’s generation, the ACCC concluded that the potential benefits of the acquisition outweighed any negatives.
Gina Cass-Gottlieb, chair of the ACCC, stated, “We found that the public benefits and public detriments in this matter were finely balanced. Likely detriments, particularly anti-competitive effects from vertical integration, had to be weighed against likely benefits to Australia’s renewable energy transition.”
This decision represents a shift for the ACCC, as their preliminary view in July suggested that the transaction could harm competition significantly. However, Brookfield and EIG have made guarantees to address market concerns and ensure the deal’s success.
The consortium argues that this acquisition is beneficial for Australia, which has been slow to adopt cleaner energy sources and has relied heavily on coal for its economy. Origin’s Energy Markets division is currently the country’s fourth-largest emitter of greenhouse gases, largely due to its reliance on thermal coal for electricity generation.
Brookfield Plans Billions of Dollars Investment in Origin’s Renewables and Storage Assets
Brookfield, a leading global asset manager, has announced its commitment to investing between 20 billion and 30 billion Australian dollars in Origin’s renewables and storage assets over the next decade. The investment will be made through the Brookfield Global Transition Fund, led by former Bank of England Governor Mark Carney, and is aimed at supporting the global transition to clean energy.
In materials presented to the Australian Competition and Consumer Commission (ACCC) in June, Brookfield and its affiliate MidOcean Energy, part of EIG, emphasized that this investment is significantly larger than the current value of Origin.
One of the key arguments put forth by Brookfield is that the deal will not harm competition in Australia’s highly regulated electricity and gas networks. Brookfield plans to run Origin’s Energy Markets business and AusNet as separate entities, ensuring fair and unbiased operations.
While the ACCC recognizes the potential competition concerns arising from Brookfield’s influence over AusNet, it also acknowledges that the acquisition will lead to an accelerated rollout of renewable energy generation in Australia. This, in turn, will result in a more rapid reduction in the country’s greenhouse gas emissions.
MidOcean Energy’s involvement in the deal is less controversial, as it only holds small stakes in Australia’s gas-export infrastructure. As part of the transaction, MidOcean will acquire Origin’s 27.5% interest in the Australia Pacific LNG facility and intends to sell 2.49% of APLNG to ConocoPhillips.
Overall, this investment by Brookfield signifies a significant step towards a cleaner and more sustainable future for Australia’s energy sector. The financial support and expertise provided by the Brookfield Global Transition Fund, along with Mark Carney’s leadership, will undoubtedly contribute to the successful transition to clean energy in the country.
