Offshore wind leader Dong Energy plans IPO

Dong Energy, a global leader in offshore wind power and a leading Danish utility business, has announced its intention to launch an initial public offering (IPO) of its shares on Nasdaq Copenhagen.

On 18 September 2015, the company published the conclusion of its IPO roadmap and announced it would work towards an IPO and listing of its shares on Nasdaq Copenhagen before the end of the first quarter of 2017. Now, the company has confirmed its intention to proceed with the next step towards an IPO and listing. It said that, barring unforeseen circumstances and subject to prevailing market conditions, the IPO could be launched for a listing in summer 2016.

The Kingdom of Denmark, as majority shareholder, will sell part of its current shareholding in the IPO, while maintaining a 50.1 per cent shareholding in Dong Energy after the IPO. The intended IPO is expected to consist of a sale of at least 15 per cent 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 communicated in connection with the publication of the prospectus. No new share capital will be issued in the IPO.

Dong Energy chief executive Henrik Poulsen said: “Over the past decade, Dong Energy has established a world-leading position in offshore wind, which accounted for 75 per cent of our capital employed at the end of 2015. We have a robust and highly visible build-out plan for offshore wind, which will deliver strong and profitable growth in the coming years. Our focus on renewable energy has turned Dong Energy into one of the fastest growing energy groups in Europe with almost two thirds of operating income generated outside of Denmark. The planned IPO will create a strong platform for the company as we continue to lead the transformation of the energy system”.

Claus Hjort Frederiksen, Minister of Finance, the Kingdom of Denmark, noted that the company had grown from primarily being a Danish utility business to become an international company with many activities outside of Denmark. He said the IPO has the support of a broad majority in the Danish parliament. Chairman of the board at Dong Energy Thomas Thune Andersen, said the announcement marked an important step in the company’s strategic journey. “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,” he said.

More than half of Dong Energy’s electricity and heat is generated from renewable sources. Being among the front-runners in the transformation towards a sustainable energy system, the company has built a global leadership position in offshore wind with a market share of 26 per cent of global installed offshore wind capacity, more than twice that of the second-largest player. Its position in offshore wind is based on a differentiated business model, with extensive competences in all parts of the lifecycle of an offshore windfarm.

The company noted that offshore wind is expected to have the highest relative growth rate in renewable energy technology in the OECD from 2014-2020. It also noted that it 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,” said the company, adding that it remains strategically committed to continue to drive down the cost of offshore wind.

Provided that the IPO takes place as expected, Dong Energy intends to pay a dividend of DKK 2.5 billion (US$383 million) for FY 2016. For subsequent years towards 2020, Dong Energy’s target, supported by expected cashflow growth from new offshore wind farms coming into operation, is to increase the annual dividend by a high single digit rate compared to the dividend for the previous year.