EON AG agreed to sell a 50 percent stake in three U.S. wind farms to Danish pension fund PensionDanmark as Germany’s biggest utility seeks to free up capital.
Dusseldorf, Germany-based EON is selling the stakes in two wind farms in Texas and a third in Pennsylvania to Hilleroed, Denmark-based PensionDanmark, the companies said in a joint release obtained by Bloomberg before the official release this morning. The parties agreed not to disclose the final amount.
PensionDanmark Chief Executive Officer Torben Moger Pedersen said the transaction was valued at “several hundred million dollars,” in a phone interview.
For EON, the deal will help “generate more value with the use of less capital,” Marcus Schenck, chief financial officer at the German company, said in the statement. “Further transactions are likely to follow.”
The German utility said in November it was planning to raise 15 billion euros ($19.4 billion) by the end of 2013 and use the proceeds to expand outside Europe. German utilities are shoring up funds as nuclear earnings decline following a decision last year by Chancellor Angela Merkel’s cabinet to phase out all local nuclear plants.
In May, EON sold a German network of natural-gas pipelines to a group led by Macquarie Group Ltd. for 3.2 billion euros ($4 billion). The company in June shelved plans to sell its energy-from-waste unit after failing to raise more than 1 billion euros from the sale.
Shares in EON declined 1.3 percent to 18.35 euros at 11:04 a.m. in Frankfurt while a gauge of European utilities slipped 1 percent and the benchmark European Stoxx 600 Index declined 0.8 percent.
EON will retain material ownership and handle day-to-day operations of the three U.S. wind farms, the statement said. The turbines were built in 2009 and 2010 and generate 433 megawatts of electricity, enough to power 120,000 households.
“The annual yield on this kind of infrastructure and energy investment will be in the area of 6 percent to 8 percent,” Moger Pedersen said. “The return is very similar to what we can get on listed equities, though with a very limited downside risk,” thanks to fixed prices negotiated on the power generated by the turbines over the next 15 years, he said.
PensionDanmark, which manages $22.5 billion, said it plans to invest a further $2 billion in infrastructure assets over five years to generate better returns for its savers. The fund is moving away from low-yielding bond markets as returns are squeezed out, Moger said.
In 2011, the fund bought a 30 percent stake in the Anholt wind farm owned by Dong Energy A/S for $680 million. The fund also holds a stake in Dong’s offshore Nysted park.