Dong Energy Raises $2 Billion in Share Sell-off

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - Denmark's largest utility, Dong Energy A/S (Fredericia, Denmark) (50%), has sold a 26% share in its company for 11 billion Danish crowns ($2 billion) in an effort to strengthen its financial situation and fund its continued drive into the offshore wind sector.

New York-based investment bank Goldman Sachs (NYSE:GS) (GS) (New York, United States) has agreed to pay over $1.4 billion for a 19% stake in state-owned Dong, while Danish pension funds ATP (Hillerod, Denmark) and PFA (Copenhagen, Denmark) have agreed to buy stakes amounting to 5% and 2%, respectively. The sale reduces the state's share from approximately 81% to 60%.

Dong is already Europe's leading offshore wind energy company with more than 2,000-megawatts (MW) of installed capacity off the coasts of Germany, the U.K. and Denmark but the company has suffered financially in the gas exploration sector. Earlier this year it announced plans for an asset sell-off and a workforce reduction of about 1,000 people.

The company owns 50% of the world's largest offshore windfarm, London Array, off the Kent coast in southeast England. Officially opened in July, it has 175 turbines and has a total generating capacity of 630 MW, enough to power nearly half a million homes. For additional information, see July 8, 2012, article - World's Largest Offshore Windfarm Officially Opened .

"Dong Energy has an exciting and profitable growth potential," stated Henrik Poulsen, Dong's CEO. "With the injection of new equity, we have almost fully delivered on our financial action plan and have thus secured the necessary platform for pursuing our ambitions for the coming years."

Andrew Wolff, Head of Goldman Sachs Merchant Banking Division for Europe, Middle East Africa and co-Head of Asia, added: "Dong Energy is one of the leading energy companies in northern Europe. Henrik Poulsen and his team are world class managers and have set ambitious goals for the company. We believe in this vision and are excited to work with the company and the Danish State to help grow the business and provide environmentally friendly energy and infrastructure for European markets."

Dong plains to invest over €4 billion ($5.2 billion) between 2013 and 2014 in energy projects, primarily offshore wind projects. In March, the company laid out its investment strategy to 2020, where it stated that it plans to quadruple its offshore capacity from the then total of 1,700 MW to 6,500 MW by the end of the decade.

Danish Finance Minister, Bjarne Corydon, said: "Once the agreement is finalised, the company can also in the future invest significantly in offshore wind turbines and exploration and production of oil and gas".

Dong and the Danish government confirmed that the company will again try to take the company public by seeking an IPO in the coming years, 'when the time is right'. Goldman Sachs, AFP and PFA have the option to sell their holdings back to the government if an IPO fails to materialise before Dong's financial report in 2017.

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