Danish pensions buy into UK wind farm for £2bn

PFA and PKA each acquire a 25% stake in the Walney Extension project, set to be the world’s largest offshore wind farm, from Orsted. The deal represents PFA’s largest single infrastructure investment and its first in offshore wind, as the pension looks to deploy some €7bn in private assets.

PFA and PKA, two of Denmark’s largest pension funds, have acquired a 50 percent stake in the UK’s Walney Extension offshore wind farm for a total of £2 billion ($2.62 billion; €2.24 billion).

Orsted, the Danish firm previously known as Dong Energy, sold half its stake in the 659MW project, which is set to become the world’s largest offshore wind farm upon commission in 2018. PFA and PKA each invested approximately £330 million in equity, with the remainder of the deal financed by an approximately £1.4 billion privately placed bond issuance. Several large institutional investors are among the bondholders, including Macquarie, which provided around £500 million of debt.

The deal represents PFA’s largest single investment and its first in offshore wind, said Henrik Nohr Poulsen, the company’s executive director.

“It was a significant expansion of our infrastructure investment,” Poulsen told Infrastructure Investor. Towards the end of 2015, the company adopted a new strategy that included investing around €7 billion in private assets, including infrastructure. “Infrastructure could easily be a third of that,” Poulsen said, adding that PFA’s alternative assets team has grown from two to eight employees.

The acquisition is PKA’s sixth offshore wind farm investment since 2011 and represents the third time it has partnered with Orsted on such a project.

“Investment in offshore windfarms has so far made two-digit returns and we are pleased to see this investment underlining our climate strategy,” said PKA chief executive Peter Damgaard Jensen.

The project, which will consist of 87 turbines, will be built in the Irish Sea, 19km off the coast of Walney Island, and will cover an area of 145 square kilometres.

The divestment increased Orsted’s 2017 EBITDA guidance from DKr17 billion-DKr19 billion ($2.7 billion-$3 billion; €2.3 billion-€2.6 billion) to DKr19 billion-DKr21 billion, the firm said.

Once a titan of oil and gas, Orsted completed the divestment of its assets in these sectors in September, selling the remainder of its oil and gas exploration portfolio to London-based chemical firm INEOS in a $1.05 billion deal. Last month, the firm abandoned the name Dong, which stood for “Danish oil and natural gas”.