We divest 50% of Walney Extension offshore wind farm and increase outlook for 2017

We have signed an agreement to sell 50% of Walney Extension, a 659 megawatt (MW) UK offshore wind farm project to a consortium consisting of PKA and PFA, two leading Danish pension funds. Each investor will obtain a 25% ownership interest in the project. Walney Extension, which is currently under construction, will be the world’s largest offshore wind farm when commissioned in the second half of 2018.

About Walney Extension

  • The offshore wind farm will have a total capacity of 659MW – enough to power more than 500,000 UK homes.
  • The offshore wind farm will consist of a total of 87 wind turbines with performance enhancing features: 40 MHI Vestas V164-8.0MW turbines and 47 Siemens Gamesa SWT-7.0 MW-154 turbines.
  • The wind farm will be located in the Irish Sea approximately 19km from the Walney Island coast in Cumbria and cover an area of 145km2

  • Walney Extension is expected to be fully commissioned in second half of 2018.

We will construct the wind farm under a full-scope EPC contract. We will also provide long-term operations and maintenance services from its O&M base in Barrow-in-Furness and provide a route to market for the power generation from Walney Extension.

Henrik Poulsen, our CEO, says:

”We’re delighted to welcome two Danish pension funds as co-owners of Walney Extension. We already have a strong partnership with PKA on three other offshore wind farms and we look forward to building an equally long-lasting relationship with PFA on what will be the world’s biggest wind farm when completed. Both partners are committed to the green energy transition and I’m pleased that our offshore wind assets continue to be attractive to institutional investors.”

The total sales price comprises the acquisition of a 50% ownership share and the commitment to fund 50% of the payments under the EPC contract for the entire wind farm (including the transmission assets), and amounts to approx. GBP 2.0bn, which will be paid during 2017 and 2018. We have hedged the GBP proceeds and these hedges currently have a market value of approximately DKK 2.0bn.

Partners committed to the green energy

Allan Polack, Group CEO, PFA, says:

“With this investment, we take yet another step into the renewable energy market which is actively contributing towards the green transition. We are proud to do so together with our business partner Ørsted, which is a front runner in this field and which has accumulated great expertise when it comes to establishing efficient offshore wind farms. The investment fits perfectly into our strategic work with focus on alternative investments that contribute to providing our customers with reliable and stable long-term returns.”

Peter Damgaard Jensen, CEO, PKA, says:

“This is the sixth offshore wind farm PKA invest in since 2011. We focus on this type of investments because we continue to see interesting opportunities in combining good returns to our members and at the same time supporting mitigation of climate changes. Investment in offshore windfarms has so far made two-digit returns and we are pleased to see this investment underlining our climate strategy. For us it is good business and common sense.”

About the two pension funds

About PFA
PFA was founded in 1917 as an independent company by a number of labour organisations, with the sole purpose of ensuring a financially secure future for the employees and their families. Today PFA is the largest commercial pension company in Denmark with more than DKK 500 billion (EUR 67 billion) under management. PFA has approximately 1.2 million individual customers from a wide range of the largest companies and organisations in Denmark.

About PKA
PKA Ltd. is one of the largest pension service providers for labour market pension funds in Denmark. Their 300,000 members work primarily in the public sector. PKA invest approximately DKK 250bn (EUR 34.2bn) on behalf of their members. PKA has a special focus on investing in projects that help to mitigate the effects of climate change. They have invested approximately DKK 19bn (EUR 2.3bn) in climate-related projects and have currently investments in five offshore wind farms since the sale of Butendiek offshore wind farm in 2016

We increase our EBITDA guidance for 2017

The divestment fully confirms our expectations of the value creation in the project. The transaction price is another proof that the market shares our view regarding the value of its projects.

Following the farm down of 50% of Walney Extension, we increase our EBITDA guidance for 2017 from DKK 17-19bn to DKK 19-21bn. Although the farm-down was expected in 2017, the transaction has resulted in a higher share of the total EBITDA gain on Walney Extension to be realised in 2017. The gain on the share purchase agreement (SPA) is expected to be booked in Q4 2017 and make up more than 75% of the total expected EBITDA contribution from the transaction. The remaining part will be booked as EBITDA from construction contracts, of which we expect around 25% in 2017 and the remainder in 2018. Expected gross investments remain unchanged at DKK 18-20bn.

The transaction is subject to approval by relevant competition authorities and is expected to be completed by Q4 2017.

As a part of the transaction, PKA and PFA is expected to issue rated project bonds to a consortium consisting of blue chip institutions, many of which manage UK pension and insurance fund capital, including Aviva Investors, BlackRock Investment Management (UK) Limited, Legal & General Investment Management Real Assets and Macquarie Infrastructure Debt Investment Solutions. One of the tranches of the bond is guaranteed by EKF Denmark’s Export Credit Agency. This will be the first issuance of a non-recourse, investment grade, certified green bond for utilisation of financing an offshore wind farm asset under construction in the UK. The development of the rated bond structure that facilitates the provision of institutional debt to the project was led by Ørsted and implemented with the strong support from PKA and PFA.
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please contact Media Relations

Tom Lehn-Christiansen +45 99 55 60 17