Goldman Sachs Invests $1.5 Billion In Danish Energy Company

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Estimated Price
$1,500.0MM
Description

Agreed to put up a US$1.46 billion stake in Danish state-run DONG Energy A/S.

New York’s Goldman Sachs (NYSE: GS) has agreed to put up a US$1.46 billion stake in Danish state-run DONG Energy A/S, the European company announced Oct. 2.

DONG is a hybrid energy company engaged in North Sea exploration and production and power stations and pipelines.

The investment by Goldman and other companies gives DONG a needed capital infusion, which the company needed after showing signs of weakness in the first half of 2013. In February, the company said its profits were impaired by losses of US$350 million (1.9 billion krone) related to gas operations in the Netherlands and Denmark.

DONG is also receiving investments from Danish pension funds Arbejdsmarkedets Tillægspension (ATP) and PFA Pension Forsikringsaktieselskab (PFA) for a total of US$2 billion (11 billion krone.)

As part of the deal, Goldman Sachs and ATP will be represented on the board of directors. DONG will also seek to initiate an initial public offering (IPO), which it previously attempted, when conditions are right, the company said.

If an IPO is not completed following the release of the company’s 2017 financial statements, Goldman and the pension funds can sell their shares back to the Danish State on pre-agreed terms.

“DONG Energy is one of the leading energy companies in northern Europe,” said Andrew Wolff, head of Goldman Sachs Merchant Banking Division for Europe, Middle East Africa and co-Head of Asia.

DONG CEO 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.”

2012 Revenue

US$12.25 billion (67.2 billion krone)

Revenue by
segment

Exploration & Production

14%

Wind Power

9%

Thermal Power

10%

Energy Markets

47%

Sales & Distribution

20%

Source: DONG

Poulsen said the company has growth potential.

“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,” he said. “I regard the interest displayed by these three well-renowned private investors as a vote of confidence in the company’s potential.”

The parties have agreed to a non-binding term sheet outlining the main terms of the investment and will move to finalize the transaction.

The agreement cuts the Danish state’s ownership interest in DONG to 60% from 81%. Goldman Sachs will own 19%, ATP 5% and PFA 2%.

DONG’s North Sea operations are focused in the waters around Denmark, Norway, the United Kingdom, the Faroe Islands and Greenland. The company also operates offshore wind power generation.