Brookfield and EIG Consortium submits ACCC application for proposed acquisition of Origin Energy
Sydney/Toronto/Washington, D.C., – A consortium comprising Brookfield Renewable Partners (NYSE: BEP, BEPC; TSX: BEP.UN, BEPC) (Brookfield), together with its institutional partners and global institutional investors GIC and Temasek, and MidOcean Energy (MidOcean), an LNG company formed and managed by EIG, has lodged its application for merger authorisation with the Australian Competition and Consumer Commission (ACCC) in relation to its proposed acquisition of Origin Energy (Proposed Transaction).
If the ACCC provides authorisation and other conditions precedent are met, upon closing of the transaction, Brookfield, which is investing through the Brookfield Global Transition Fund, its institutional partners and global institutional investors will own Origin’s Energy Markets business, a power generator and energy retailer. MidOcean will separately own Origin’s Integrated Gas business including its stake in Australia Pacific LNG (APLNG).
The consortium expects the ACCC will advise its decision after 90 days following a process of seeking industry and other stakeholder feedback on the Proposed Transaction.
The consortium’s application sets out the consortium’s view as to why the authorisation application should be approved. Factors described in the application include:
- The existing regulation of the energy sector (electricity and gas) means that the possible concerns that may arise from vertical integration do not apply in respect of the Proposed
- The lack of any ability or incentive for AusNet to foreclose Origin’s generation competitors is reinforced by their separate ownership (including separate Brookfield funds) and
- The Proposed Transaction will provide substantial public benefits as Brookfield will rapidly expand and accelerate development of Origin Energy Markets’ renewable generation build out, materially improving Australia’s ability to reach its net zero targets.
Brookfield Asia Pacific CEO Stewart Upson said: “The need to decarbonise the world’s energy systems in order to minimise the impact of climate change and limit the global temperature increase is both urgent and daunting. The amount of private sector investment required for the energy transition over a short timeframe is unprecedented.
“The Proposed Transaction to acquire Origin Energy will not be detrimental to competition in any market given the intensely regulated nature of the electricity generation sector, reinforced by the fact that AusNet and Origin will remain separate stand-alone companies with separate investor groups.
“Moreover, the transaction will provide substantial public benefits because we intend to invest between A$20 billion and A$30 billion in rapidly expanding and accelerating the renewables build out at Origin Energy Markets. This will deliver both environmental benefits by helping Australia meet its net zero targets, and consumer benefits by putting downward pressure on electricity prices and reducing the risk of market dislocation events over time. It will also provide a range of public benefits including assisting Australia to meet its international commitments to address climate change.”
EIG CEO Blair Thomas said: “Energy transition will require a “whole of society” approach to be effective. Government has an important role to play in enabling private sector capital and solutions and we believe this transaction is an important step in the right direction.”
The transaction does not raise any material competition concerns
In its application, the consortium states the Proposed Transaction will not result in a substantial lessening of competition in any relevant market. We expect the ACCC will focus its attention on the investments in AusNet and Intellihub by another Brookfield business group.
AusNet is heavily regulated in relation to both transmission and distribution. Brookfield believes this degree of regulation combined with the operating dynamics inherent in the Victorian energy environment means AusNet has neither the ability nor the incentive to discriminate in favour of Origin Energy markets.
Intellihub, which is owned in a 50:50 joint venture with a third party, operates in a competitive market and those market dynamics prevent any form of anti-competitive behaviour.
Origin, AusNet and Intellihub will remain separate companies, with separate investor groups. Different Brookfield funds hold majority stakes and the unaffiliated co-investors in each business are different.
The acquisition of Origin Energy Markets will contribute materially to Australia achieving its net zero plans and deliver other public benefits
Brookfield will acquire Origin Energy Markets through its Brookfield Global Transition Fund I (BGTF I) together with its institutional partners and global institutional investors GIC and Temasek (the BGTF Consortium).
The acquisition is an illustration of the urgently-needed private sector investment in the transition, and one that will make a material difference to Australia achieving its net zero targets.
Origin faces significant challenges in its ability to raise substantial new equity and debt to fund an ambitious transition program because of its current listed company ownership structure. The BGTF Consortium will support the investment of between A$20 billion and A$30 billion in new renewable energy capacity within the Origin Energy Markets business over the next 10 years. This is the ‘green build-out’ plan.
The ‘green build-out’ plan involves the development of up to 14 GW of new renewable generation and storage assets within the Origin Energy Markets business by 2033. It is approximately 10 GW over and above Brookfield’s estimate of what Origin is likely to develop by 2033 absent the proposed transaction. To put this in context, the NEM currently has 27.5 GW of grid scale clean energy capacity.
Over and above the additional ~10 GW of renewable capacity that will be developed, the Proposed Transaction will benefit Australia and its consumers in a number of ways.
- The Proposed Transaction will facilitate more extensive decarbonisation in Australia through the development and expansion of sophisticated behind the meter solutions for consumers, which are critical to Australia meeting its emissions targets. The BGTF Consortium plans to transform Origin’s existing distributed energy platform to amplify its impact for residential and C&I customers, and meet growing consumer demand in this sector;
- The BGTF Consortium has ambitions to support a local manufacturing industry that will contribute to manufacturing components and parts for renewables development in Australia, particularly wind and batteries, and building local expertise;
- The Proposed Transaction will facilitate the growth of Australia’s renewable power industry through the BGTF Consortium’s partnerships with various third parties at different stages of the supply chain to execute its green build-out plan;
- The Proposed Transaction actively supports the development of new renewable technologies. Origin will have greater opportunity to develop new technologies at a commercially viable scale through the BGTF Consortium’s expansive market reach; and
- There is significant upside to Australian consumers if Australia’s transition to renewables is achieved Ultimately, the transition will deliver cheaper, cleaner energy and storage, placing downward pressure on wholesale prices overtime and consequently, energy bills.
Mr Upson said: “Our plan is ambitious yet realistic. 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 BGTF Consortium, through Brookfield, also has global renewables procurement and technical expertise, and a track record in North America, Asia, Europe and other jurisdictions of delivering on equally ambitious plans.”
– End –
|Brookfield Asia Pacific||Consortium|
|Catherine Woods||Ben Wilson (GRACosway)|
|+61 477 320 333||+61 407 966 083|
|Simon Maine||Alex Jackson|
|+44 7398 909 278||+1 416-649-8196|
|Kelly Kimberly / Brandon Messina (FGS Global)|
About Brookfield Renewable
Brookfield Renewable operates one of the world’s largest publicly traded, pure-play renewable power platforms. Our portfolio consists of hydroelectric, wind, utility-scale solar and storage facilities in North America, South America, Europe and Asia, and totals approximately 25,700 megawatts of installed capacity and a development pipeline inclusive of approximately 126,000 megawatts of renewable power assets, 12 million metric tonnes per annum (“MMTPA”) of carbon capture and storage, 2 million tons of recycled material, 4 million metric million British thermal units of renewable natural gas pipeline, a solar manufacturing facility capable of producing 5,000 MW of panels annually and 1 MMTPA green ammonia facility powered entirely by renewable energy. Investors can access its portfolio either through Brookfield Renewable Partners L.P. (NYSE: BEP; TSX: BEP.UN), a Bermuda-based limited partnership, or Brookfield Renewable Corporation (NYSE, TSX: BEPC), a Canadian corporation.
Brookfield Renewable is the flagship listed renewable power company of Brookfield Corporation, a leading global alternative asset manager with over $825 billion of assets under management. For more information on Brookfield Renewable please see our website and for more information on the transaction see our presentation here.
About Brookfield Global Transition Fund
The Brookfield Global Transition Fund, co-led by Mark Carney, Brookfield Chair and Head of Transition Investing, and Connor Teskey, CEO of Brookfield Renewable, is Brookfield’s inaugural impact fund focusing on investments that accelerate the global transition to a net-zero carbon economy, while delivering strong risk-adjusted returns to investors. Institutional investors committed US$15 billion, making it the largest fund ever raised to support the transition to net zero. The Fund targets investment opportunities relating to reducing greenhouse gas emissions and energy consumption, as well as increasing low-carbon energy capacity and supporting sustainable solutions. Consistent with its dual objectives of earning strong risk-adjusted returns and generating a measurable positive environmental change, the Fund will report to investors on both its financial and environmental impact performance.
About EIG and MidOcean
EIG is a leading institutional investor in the global energy and infrastructure sectors with $22.7 billion under management as of December 31, 2022. EIG specializes in private investments in energy and energy-related infrastructure on a global basis. During its 40-year history, EIG has committed $44.6 billion in 396 projects or companies in 42 countries on six continents. EIG’s clients include many of the leading pension plans, insurance companies, endowments, foundations and sovereign wealth funds in the U.S., Asia and Europe. EIG is headquartered in Washington, D.C. with offices in Houston, London, Sydney, Rio de Janeiro, Hong Kong and Seoul.
MidOcean is an LNG company formed and managed by EIG to build a diversified, resilient, cost and carbon competitive LNG portfolio. It reflects EIG’s belief in LNG as a critical enabler of the energy transition and the growing importance of LNG as a geopolitically strategic energy resource. On October 7, 2022, MidOcean entered into definitive documentation to acquire a portfolio of interests in four Australian LNG projects from Tokyo Gas Group for US$2.15 billion, marking the launch of its strategy to create a diversified ‘pure play’ integrated portfolio of high-quality operating LNG projects. MidOcean is headed by De la Rey Venter, a 25-year industry veteran who most recently served as Global Head of LNG for Royal Dutch Shell.
Cautionary Statement Regarding Forward-looking Statements
Certain information in this press release, including statements regarding the acquisition of Origin and the intended separation of Origin Energy Markets (to be owned by a Brookfield-led consortium) and Integrated Gas segments (to be owned by EIG), the timeline for, and the anticipated closing of, the transaction, the expected reduction in Origin Energy Markets’ carbon emissions, including through the expected early retirement of Eraring, Brookfield’s expected investment to build out up to 14 GW of new renewable generation and storage facilities in Australia, constitutes forward-looking information within the meaning of applicable securities laws in Canada and the United States, including the United States Private Securities Litigation Reform Act of 1995. In some cases, but not necessarily in all cases, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “targets”, “expects” or “does not expect”, “is expected”, “should”, “an opportunity exists”, “is positioned”, “estimates”, “intends”, “assumes”, “anticipates” or “does not anticipate” or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might”, “will” or “will be taken”, “occur” or “be achieved”. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding future events. Forward-looking information is necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by us as of the date of this press release, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the factors described in greater detail in the “Risk Factors” section of Brookfield Renewable’s current annual report on Form 20-F and in Brookfield Renewable’s other materials filed with the SEC and the Canadian securities regulatory authorities from time to time, available at www.sec.gov and www.sedar.com, respectively. These factors are not intended to represent a complete list of the factors that could affect Brookfield Renewable; however, these factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to be correct. The forward-looking statements contained in this press release are made as of the date of this press release, and Brookfield Renewable expressly disclaims any obligation to update or alter statements containing any forward-looking information, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by law.
No securities regulatory authority has either approved or disapproved of the contents of this communication. This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.