COPENHAGEN (Reuters) - Goldman Sachs (GS.N) and two Danish pension funds are to buy a combined 26 percent stake in Danish state-owned oil and gas group DONG Energy for 11 billion Danish crowns ($2.00 billion) and plan an IPO for the firm, the companies said.
The investment via a capital increase will allow DONG DOENRY.UL to strengthen its balance sheet and pursue an ambition to become a leading player in offshore wind energy.
Already European market leader with 2 gigawatts of offshore wind power installed in Denmark, Britain and Germany, DONG wants to more than triple that to 6.5 gigawatt by 2020, its CEO told Reuters in August.
“Once the agreement is finalized, the company can also in the future invest significantly in offshore wind turbines and exploration and production of oil and gas,” Danish Finance Minister Bjarne Corydon said in a statement.
Goldman Sachs Merchant Banking Division official Andrew Wolff said the bank believed in DONG’s strategy and would help it “provide environmentally friendly energy and infrastructure for European markets”.
Goldman Sachs (GS.N) will subscribe to new shares worth 8 billion crowns, giving it a stake of about 19 percent. Danish pension fund Arbejdsmarkedets Tillægspension (ATP) will subscribe 2.2 billion crowns for a 5 percent stake and Pension Forsikringsaktieselskab (PFA) 0.8 billion crowns for a 2 percent stake.
The deal would see the state’s ownership reduced from around 81 percent to about 60 percent, and was based on a valuation of 31.5 billion crowns ($5.74 billion) before the capital increase.
DONG and its new investors said in a statement they would seek an initial public offering when conditions are right.
But they added that if an IPO has not been completed following the release of financial statements for the 2017 financial year, the new investors would have the option to sell their shares back to the Danish State on pre-agreed terms. It gave no further detail on the sell-back clause.
An IPO would further break open the near-total public control over the utility sector in Scandinavia, where Finland’s Fortum - which is 50.76 percent state-owned - is the only major listed public utility.
Sweden’s finance minister said last week that a listing of Swedish utility Vattenfall VATN.UL was not currently on the agenda, although bankers have told Reuters the firm is starting to prepare the ground for a sale or a stock market flotation of its ailing European business.
DONG Chief Executive Henrik Poulsen, who took the reins in August 2012, is refocusing the firm’s investments and strengthening its balance sheet.
He has said that 50 percent of DONG’s future investments will go towards offshore wind and 40 percent to DONG’s traditional business of oil and gas exploration and production in the seas around Denmark.
At the announcement of 2012 results in February, Poulsen said DONG planned to divest 10 billion Danish crowns ($1.80 billion) of non-core assets in 2013-14, cut costs by 1.2 billion and raise 6 to 8 billion crowns of new equity.
In the past year, DONG has sold more than 8 billion crowns worth of assets - including Danish, Polish, and Norwegian onshore wind projects - and announced nearly 1,000 job cuts.
Its 36 billion crown debt is rated BBB+, three notches above junk, and is on negative outlook with Standard and Poor’s and Fitch. ($1 = 5.4887 Danish crowns)
Reporting by Mette Fraende and Geert De Clercq; writing by Geert De Clercq; editing by Tom Pfeiffer