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DONG Energy set to IPO this summer

Existing shareholders are looking to sell down about 15% of the Danish utility in a transaction that could value the company at $12.3bn.

DONG Energy, the Danish utility, today announced its intention to forge ahead with a public listing by the summer.

The move comes after the company first disclosed plans for a float last September, with an IPO on Nasdaq Copenhagen to be launched before the end of the first quarter of 2017. Analysts said the listing could value the company at about DKr80 billion ($12.3 billion; €10.8 billion), which would make it the largest European IPO so far this year.

The current owners hope to sell down at least 15 percent of the business through the transaction. The state of Denmark, which currently holds 58.8 percent of DONG, intends to retain a 50.1 percent stake following the IPO.

The company’s other shareholders include New Energy Investment (17.9 percent), which is indirectly owned by Goldman Sachs, as well as power co-operative SEAS-NVE (10.8 percent) and Danish pension ATP (4.9 percent), among others.

In about a decade, DONG has gone from being a regional, coal-intensive utility to becoming the world’s largest offshore wind player with a 26 percent market share. Of its DKr20-DKr23 billion projected EBITDA range for 2016, the company expects DKr10-DKr12 billion to come from wind.

Floatation plans were pulled three times between 2006 and 2008, so a successful listing would vindicate the company’s move towards renewable energy.

The company posted DKr18 billion in profits last year. It has 3.7GW of offshore wind farms with secured consent and subsidies currently under construction, including the 1.2GW Hornsea 1, the 582MW Gode Wind 1&2 and the 659MW Walney Extension 1&2 projects.

“Our focus on renewable energy has turned DONG Energy into one of the fastest growing energy groups in Europe with almost two-thirds of operating income generated outside of Denmark,” said Henrik Poulsen, chief executive of DONG, in a statement. “The planned IPO will create a strong platform for DONG Energy as we continue to lead the transformation of the energy system.”

About 80 percent of DONG capex is expected to go towards wind power in the years to 2020, with 10-15 percent going to its Danish utility branch and 5-10 percent earmarked for low-cost oil and gas generation. Free cashflows from the latter will go towards investing in renewable projects, the company said.

The company will announce the IPO’s final size when the prospectus is published, with no fresh capital to be raised through the floatation.