Leading Danish utility Dong Energy, one of the most prominent companies in offshore wind power, has announced its intention to launch an Initial Public Offering of its shares on Nasdaq Copenhagen.
Dong first flagged up its intention in September last year, when it announced its intention to list of its shares on Nasdaq before the end of Q1, 2017. Barring unforeseen circumstances and subject to prevailing market conditions, the IPO could be launched for a listing this coming summer.
No new share capital will be issued in the IPO. The Kingdom of Denmark, as majority shareholder (58.8%) will sell part of its current shareholding, while maintaining a 50.1% shareholding. The intended IPO is expected to consist of the sale of at least 15% of the existing shares in the company through a partial sell-down by the current shareholders, other than employee shareholders. The final offer size will be announced on publication of the share sale prospectus.
Other major shareholders are (ultimately) The Goldman Sachs Group (17.9%), SEAS-NVE A.M.B.A, (10.8%), and ATP (4.9%).
Thomas Thune Andersen, chairman of the Dong board of directors, said "In just a decade, Dong Energy has transformed from being a regional utility business and one of the most coal-intensive utilities in Europe into a global leader in renewable energy. We look forward to inviting new shareholders to take part in the future ownership of the company and to join us in our journey to build a sustainable energy system for the future".
Henrik Poulsen, CEO of Dong Energy, commented: "Over the past decade, Dong has established a world-leading position in offshore wind, which accounted for 75% of our capital employed at the end of 2015. The planned IPO will create a strong platform ... as we continue to lead the transformation of the energy system."
Strategic transformation
Offshore wind is expected to have the highest relative growth rate in renewable energy technology in the OECD from 2014-2020 according to Bloomberg New Energy Finance. Offshore wind benefits from utility-sized power generation, limited visual impact and high load factors. Rapid industrialisation, larger wind turbines and increasing scale of wind farms have helped to significantly reduce the cost of electricity from offshore wind in recent years.
In its Annual Report for 2015, Dong Energy predicted a 2016 EBITDA in the range of DKK 20-23 billion. Of this, DKK 10-12 billion is expected to come from wind power. In 2016, Dong expects to make gross investments of DKK 18-21 billion. For the period 2017-2020, the total gross investment programme is expected to be DKK 60-70 billion.
Investments to support future growth will be focused on renewable energy, and wind power is expected to attract 80% of the expected gross investments from 2016-2020. For the period 2017-2020, average return on capital employed (ROCE) is expected to be in the range of 12-14%, driven by the growth in wind power.
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