Denmark, Goldman Share Sale Will Make Dong Global, Chairman Says

  • Danish state-controlled utility eyes U.S., Asian markets
  • IPO expected to help fund expansion of wind farm division

Dong Energy A/S, whose offshore wind farms in northern Europe are the world’s biggest, plans to use its initial public offering to expand into Asia and North America.

The share sale led by the Danish state and Goldman Sachs "will allow us to take an even more aggressive approach,” chairman Thomas Thune Andersen said in an interview Friday.

Andersen, in Germany for the inauguration of Dong’s Borkum Riffgrund I offshore wind farm in Norddeich, said the IPO would grant Dong a more "widely spread" investor base, facilitating the company’s access into U.S. and Taiwan.

The government of Denmark, which holds 59 percent of Dong, revealed its IPO road map for the utility last month. The sale, which may value Dong as much as 70 billion kroner ($10.6 billion), is set to take place in the next 18 months and will be the country’s biggest ever.

Echoing the government’s main argument for the sale, Andersen said the IPO will make it easier for Dong to access the international markets for financing.

Dong had limited its wind operations to waters around Britain and Denmark until it acquired the rights in April to erect turbines off the coast of Massachusetts.

A decision on the Massachusetts project is expected to be made in the coming year, while Taiwan is also seen as a potentially interesting market, Samuel Leupold, the head of Dong’s wind power unit, told reporters at the event in Germany. 

Developing new markets for offshore turbines and wind farms would be a profitable way for Dong to levy on the IPO, according to Jacob Pedersen, an analyst at Sydbank.

“Dong can handle these big projects very well and they handle risks better than almost everyone else in the market,” Pedersen said. “In particular that’s what’s needed in developing new markets.”

The Danish utility has a BBB+ rating from Standard & Poor’s and Fitch and a Baa1 rating at Moody’s Investors Service.

"Even though we are well capitalized, if you look at the scale of the projects we have to keep a close eye on project financing," Andersen said.

The company dominated the Danish media headlines in 2014, when a junior coalition member quit the previous government in protest after part of Dong was sold to Goldman Sachs. The Wall Street bank paid about $1.5 billion for an 18 percent stake, a figure considered too low by some lawmakers. The government at the time said the cash injection that Goldman delivered came at a crucial moment and under terms others weren’t ready to accept.

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