A private equity consortium hoping to buy Australia's largest energy retailer has laid out its reasoning why the $18.7 billion transaction should be allowed to go through despite possible antitrust concerns.
The global consortium laid out its rationale for the acquisition of Origin Energy in a filing to the Australian Competition and Consumer Commission on Wednesday, touting its plan to invest billions in green energy to accelerate Australia's energy transition.
The plan calls for Brookfield Renewable Partners and its institutional partners GIC and Temasek to own Origin's Australian energy markets business, including Australia's biggest power station, coal-fired Eraring on the shores of Lake Macquarie in NSW.
Origin's gas business, including its stake in Australia Pacific LNG, the largest producer of natural gas on the east coast, would be spun out to private-equity owned LNG company MidOcean Energy.
While different Brookfield units also own Victoria-based gas and electricity distributor AusNet and a half-stake in metering company Intellihub, Brookfield says the transaction wouldn't lessen competition.
"Origin, AusNet and Intellihub will remain separate companies, with separate investor groups," the filing says.
"Different Brookfield funds hold majority stakes and the unaffiliated co-investors in each business are different."
AusNet is a heavily regulated company and would have neither the ability nor incentive to discriminate in favour of Origin Energy, the filing states.
The transaction would also provide substantial public benefits because Brookfield and its partners plan to invest between $A20-$A30 billion accelerating Origin's renewables buildout over the past 10 years, the filing says.
The plan involves developing up to 14 gigawatts of renewable generation, 10 gigawatts over and above Brookfield estimates that Origin would otherwise develop by 2033.
To put that in perspective, Australia's energy grid currently has 27.5 gigawatts of clean energy capacity, out of a total capacity of 54 gigawatts.
The consortium hasn't spelled out specific renewable projects but mentioned interest in wind and batteries as well as installing sophisticated meter solutions for consumers.
“Our plan is ambitious yet realistic," Brookfield Asia Pacific CEO Stewart Upson said.
"We have capital immediately available for investment in the transition and relationships with private co-underwriters seeking a home for capital that will promote the transition."
The consortium also has global renewables procurement and technical expertise, and a track record on delivering on similar ambitious plans in North America, Asia, Europe and elsewhere, he added.
The consortium expects that the ACCC will advise on its decision within 90 days after seeking industry and other stakeholder feedback.
