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Activists’ $30b challenge to AusSuper on Origin

Angela Macdonald-SmithSenior resources writer

Nov 16, 2023 – 5.52pm

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The heads of seven green activist groups in the eastern states have urged AustralianSuper to either match the $30 billion investment “commitment” made by Brookfield as part of its takeover bid for Origin Energy, or stop blocking the deal.

In an open letter sent to Paul Schroder, CEO of the industry super fund, on Thursday, the chief executives of groups including the Nature Conservation Council of NSW, the Climate Energy Finance think tank and Environment Victoria say Brookfield’s intention to build 14 gigawatts of clean energy generation by 2033 through Origin would materially help Australia achieve its Paris climate goals.

AusSuper CEO Paul Schroder, who was sent the letter on Thursday. Eamon Gallagher

“Conversely, blocking this bid and the associated clean energy investment will cause significant harm to the long-term interests of your members and all Australians by locking in higher energy prices and more polluting forms of electricity generation for longer,” reads the letter, which was copied to AusSuper chairman Don Russell.

AusSuper, whose 16.5 per cent stake in Origin may be enough to ensure the deal fails to secure shareholder approval at the November 23 vote, reiterated its appetite to provide capital to help the energy supplier decarbonise.

“AustralianSuper is a long-term investor in the Australian economy and is open to providing capital to assist Origin as it prepares to transition over the coming decades, while delivering on our net zero commitment and our purpose to help members achieve their best financial position in retirement,” a spokesman said.

“The challenge facing the nation as we work towards net zero by 2050 is not a lack of capital but rather a shortage of good quality investment opportunities.”

The spokesman reconfirmed AusSuper will vote against the offer from Brookfield and EIG because it “believes the ongoing energy transition has further enhanced the value of strategic energy transition platforms, such as Origin”.

Growing frustration

The appeal by the groups reflects growing frustration in some quarters about the stance being taken by Origin’s largest shareholder to oppose the takeover.

However, other investors such as Perpetual back AusSuper’s opposition to the $9.53-a-share offer.

Critics of the deal point to what they regard as overly conservative assumptions used by Grant Samuel, the independent expert hired by Origin to assess the offer.

Grant Samuel’s long-term assumption for oil prices of $US60-$US65 a barrel is lower than consensus, which is closer to $US70/bbl. It also assumes long-term LNG prices of $US6.8-$US7.4 per unit, while consensus is closer to $US9 and rising.

Deal critics also note Origin’s Eraring coal power station is set to run for longer, rather than closing in 2025 as assumed.

One analyst said the price assumptions made by Grant Samuel were lower than those it made two years ago when valuing the Santos merger with Oil Search, despite the invasion of Ukraine since then.

“By using more punitive valuation assumptions when looking at Origin today than at Oil Search two years ago, despite the macro outlook massively improving since then and being in a safer jurisdiction, it looks like shareholders are being duped by the Grant Samuel report into accepting a substandard offer,” they said.

Shares in Origin rose 2 per cent to $8.74, about 8 per cent below the offer price.

Angela Macdonald-Smith writes on the resources industry with a focus on energy, including gas, oil, electricity and renewables. Connect with Angela on Twitter. Email Angela at amacdonald-smith@afr.com