Image:Orsted
Source:Reuters: Norwegian energy giant Equinor has acquired a 9.8% stake in Danish offshore wind farm developer Orsted, valued at approximately $2.5 billion, as part of its strategy to bolster its renewable energy portfolio. Orsted, the world’s largest offshore wind developer, has seen its stock plummet by 69% since its 2021 peak, largely due to escalating costs and technical difficulties in the offshore wind industry.
Equinor’s CEO, Anders Opedal, described the move as a calculated long-term investment in the sector, despite the challenges currently facing offshore wind. “We see this as a good counter-cyclical move at this point in time to get into a very attractive portfolio,” Opedal told Reuters.
This acquisition will contribute to Equinor’s goal of expanding its renewable energy capacity, adding 1.7 gigawatts (GW) to its overall target of 12-16 GW by 2030. The company, which has less than 1 GW of installed renewable capacity as of late 2023, has struggled to make significant progress on its renewable energy ambitions, making this deal a crucial step toward those goals.
The impact of the news was immediate, as Orsted’s shares rose by 8% before settling 5.8% higher by mid-day trading in Europe. In contrast, Equinor’s stock took a hit, dropping 3.9%.
Equinor stated that it does not plan to increase its stake beyond 10% nor seek board representation within Orsted. The Norwegian company’s ownership was accumulated through a combination of market purchases and a block trade, positioning it as the second-largest shareholder in Orsted, behind the Danish government, which maintains a 51% controlling interest.
Analysts have pointed out that while Equinor’s stake signals confidence in the long-term prospects of offshore wind, it doesn’t alter the fundamental direction Orsted is taking. Sydbank analyst Jacob Pedersen noted that Orsted’s position is unlikely to change drastically, as the Danish government remains a key player with firm political backing.
Equinor’s investment mirrors a strategic move made a decade ago by Goldman Sachs, which became a major shareholder when Orsted, then known as DONG Energy, was still focused on oil and gas. The Wall Street firm managed to double its investment in just two years, a notable turnaround when Orsted pivoted to its current focus on renewable energy.
Source:Reuters
