Financial transaction

Barrenjoey and UBS get bragging rights after blockbuster $18 billion deal with Origin

For Goldman and Macquarie, this is an unfortunate case of missed fee opportunities. The pair advised AGL’s board during its failed talks with Brookfield and Grok Ventures in March, leaving them as sideline observers of Brookfield’s Origin bid.

The takeover of Origin is not yet done. Bankers will only pocket their fees for the transaction once it has been approved.

Ramsay Health Care failed deal is still fresh in the minds of bankers after a KKR-led consortium failed to buy the company in September.

If the Origin takeover goes through, now is a great time for banks, as they will be looking to bolster their advisory capabilities against valuable year-end rankings.

Rankings may seem like mere marketing material, but playing a role in what is potentially the biggest deal of 2023 bolsters these companies’ credentials when they bid for work next year, beyond related ancillary activities. to the Brookfield/EIG-Origin Agreement.

Dealmaking in an overbanked space

In Australia’s investment banking environment, a seat on big deals such as the takeover of Origin is essential for banks’ rainmakers, who rely on an increasingly tight fee pool. by a saturated market filled with American and European stores.

The fee pool, meanwhile, has shrunk in 2022 as investment banks deal with the fallout from rising borrowing costs and inflation, both of which have lowered trading volumes. .

Including Brookfield’s move to Origin, M&Deals worth about $86 billion have been announced in Australia this year, up from $185 billion at the same time last year, according to Dealogic data.

In response to the drop in transactions, global investment banks have downsized and are likely to reduce banker bonuses In the coming months.

Amid a down year, some bankers questioned the viability of upstart investment banks Jarden and Barrenjoey. While the two are proving they can cut it with deep-pocketed Wall Street peers, there’s no immediate cure for a depressed trading market.

Still, the tender space isn’t all crickets.

Barrenjoey is Advisor Lark Distilling on a potential sale, while another boutique investment store – Greenhill & Co-is advice to Pacific Smiles dental group, The Australian Financial Review‘s Street Talk reported this month.

Barrenjoey is also jostling for pole position in the Australian Institutional Equity Market alongside Macquarie.

Barrenjoey has invested heavily in start a full service business with advisory capabilities and fixed income derivatives.

The bank plans to put in place prime financing and a private capital offering, among other business lines, before the end of the year.

While these start-up costs have hampered Barrenjoey’s profitability and raised questions about the sustainability of a start-up investment bank in a declining market, the ability to diversify its revenue streams will be critical in 2023.

Bankers believe deal flow will remain sluggish as long as economic uncertainty and talk of a recession make markets difficult for new initial public offerings and M&A.