Denmark’s biggest IPO to be windfall for Goldman Sachs

Danish utility and offshore wind farm operator Dong Energy said Thursday that it could be valued at up to 106.5 billion kroner (€14.3 billion, $16.0 billion) in what is expected to be Denmark's biggest initial public offering (IPO).

Denmark's biggest IPO to be windfall for Goldman Sachs
Dong's expected market value is up to 106.5 billion kroner. Photo: Claus Fisker/Scanpix
The world's largest operator of offshore wind farms plans to sell between 15.1 and 17.4 percent of its shares, meaning the Danish government stands to earn up to 8.9 billion kroner from the sale.
“The IPO is an important milestone in the development of Dong Energy,” Danish Finance Minister Claus Hjort Frederiksen said in a statement.
The government-controlled group, which makes most of its money from wind power as well as oil and gas, is aiming for a share price of 200 to 255 kroner, giving it a market value of between 83.5 and 106.5 billion kroner.
The Danish government will maintain a 50.1-percent stake after the listing, which will see shares begin trading on the Copenhagen stock exchange from June 9th.
However, it did take long before news of Dong's valuation ripped open old political wounds caused by the 2014 sale of a stake in Dong Energy to US investment bank Goldman Sachs. 
The sale led the leftist Socialist People's Party to exit Denmark's former centre-left government amid claims that the bank had been given unusually favourable terms.
After the sale, it was revealed that a Danish pension fund had actually offered a higher bid than the American investment firm.
With Goldman Sachs expected to earn up to 4.8 billion kroner from the IPO, critics of the sale said Thursday's valuation proved that the investment bank paid far too little for its 18 percent stake. 
“Everything that those of us who opposed the partial sale to Dong warned about has happened. It now suddenly turns out that Dong is worth more than double what it was when it was sold and that Goldman Sachs will get an enormous profit out of the two years that have passed,” Pelle Dragsted of the left-wing Red-Green Alliance (Enhedslisten) told TV2 News. 
His thoughts were echoed by Danish People's Party leader Kristian Thulesen-Dahl.
“Dong was valued too low when it was sold to Goldman Sachs and it's important to remember that all of the players involved at the time had a shared interest in valuing Dong as cheaply as possible so that they could get this huge increase in value and earn billions of kroner,” he told broadcaster DR.
Frederiksen flatly denied that Dong had had been valued too low at the time of the partial sale and said that the increase in value is due to the company's success. 
“The company has grown from primarily being a Danish utility business to becoming a growing international company with a leading position in the offshore wind sector,” he said.
Sydbank analyst Morten Imsgard said Thursday's pricing was “at the high end” of his expectations.
“It is a company that is relatively complex to value. Because it's crucial what expectations you have as an investor on the offshore wind turbine sector,” he told news agency Ritzau.
Dong Energy announced its plans for an IPO within 18 months last September, after cancelling plans to list three times before.

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