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A Brookfield-led consortium trimmed its offer for Origin Energy by 1 per cent on Wednesday, valuing Australia’s no.2 power producer and energy retailer at A$15.33-billion ($10.5-billion), after government moves to cap gas prices hit valuations in the sector.

Shares in Origin surged 13 per cent to A$7.90 in early trade but remained well below the new tabled offer of A$8.90 per share as investors weighed the risks of a transaction going ahead.

The consortium’s first offer in November of A$9 per share was a near 55 per cent premium to its previous close and valued Origin A$15.5-billion.

Argo Investments, Origin’s ninth largest investor, said the revised offer was still good value for the takeover target.

“We are still positive on this deal,” said Andy Forster, Argo’s senior investment officer at Argo Investments. “It’s only a small reduction in terms of value following the government intervention with the gas price caps.”

The parties did not spell out the reason for the drop in price but Australian gas firms have seen their valuations hit by the government’s planned 12-month cap on gas and coal prices to keep a lid on bills for households and businesses hit by soaring global energy prices.

The Origin statement on Wednesday mentioned, for the first time, that the revised proposal was conditional on the “completion of black box due diligence”.

“The market is clearly factoring in the remaining risks and regulatory risks will be a big part of that,” Morgans analyst Max Vickerson said. “It’s also worth noting that due diligence isn’t quite complete either.”

Brookfield’s deal requires Australian Competition and Consumer Commission (ACCC) and Foreign Investment Review Board (FIRB) approval to proceed.

The Origin board stopped short of delivering a recommendation of support for the bid, another condition needed for the offer to proceed. “The Origin board considers the revised proposal has the potential to deliver significant value to shareholders, and accordingly, intends to continue to progress discussions with the consortium,” the energy retailer said.

Under the plan, Brookfield Asset Management BAM-T would acquire Origin’s energy markets business, while MidOcean Energy, the other consortium partner which is backed by energy investment firm EIG, would take control of Origin’s integrated gas business, including its 27.5 per cent stake in Australia Pacific LNG (APLNG).

Origin has been looking to speed up its transition to cleaner energy, accelerating the planned shutdown of the country’s biggest coal-fired power plant and selling its gas exploration assets.

“Brookfield is committed to investing in the energy transition in Australia and we see Origin playing a leading role in helping Australia meet its legislated climate and energy goals,” Brookfield Asia Pacific chief executive Stewart Upson said in a statement.

The revised offer comprises A$8.90 apiece for the first 100,000 Origin shares. For any stake above, shareholders will receive a combination of A$4.334 and a U.S. dollar payment of $3.194 per share that reflects Origin’s interest in APLNG that pays dividends in U.S. dollars.

Almost 75 per cent of Origin’s shareholders own fewer than 100,000 shares, according to its annual report.