Goldman Sachs funds invest in DONG Energy, seek IPO

Thu Oct 3, 2013 2:40pm EDT
 
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By Mette Fraende and Geert De Clercq

COPENHAGEN (Reuters) - Two funds managed by Goldman Sachs (GS.N: Quote) and two Danish pension funds will between them buy 26 percent in Danish state-owned oil and gas group DONG Energy for 11 billion Danish crowns ($2.00 billion) and plan an IPO for the firm, the companies said.

Credit analysts said the investment, via a capital increase, could lead to a review of the negative outlook on DONG's credit rating. It will allow DONG DOENRY.UL to strengthen its balance sheet, hit by falling electricity demand due to the economic crisis and competition from cheap coal, and pursue its ambition to become a leading player in offshore wind energy.

Already European market leader with 2 gigawatts of offshore wind power installed in Denmark, Britain and Germany, DONG wants to more than triple that to 6.5 gigawatt by 2020, its CEO told Reuters in August.

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

Goldman Sachs Infrastructure Partners - one of the world's biggest infrastructure investors with nearly $10 billion under management - will subscribe to new shares worth 8 billion crowns, along with energy-focused private equity fund Broad Street Energy Partners, also managed by Goldman Sachs. Together they will have a stake of about 19 percent.

Danish pension fund Arbejdsmarkedets Tillægspension (ATP) will subscribe 2.2 billion crowns for a 5 percent stake and Pension Forsikringsaktieselskab (PFA) 0.8 billion for a 2 percent stake.

The deal would see the state's ownership reduced from around 81 percent to about 60 percent.

NEGATIVE RATINGS OUTLOOK   Continued...

 
A view of the Goldman Sachs stall on the floor of the New York Stock Exchange July 16, 2013. REUTERS/Brendan McDermid