Denmark's Dong Energy is hoping to secure a market capitalization of as much as $16 billion when it lists on the Copenhagen bourse, setting itself a lofty target that is well above analysts' estimates of about $12 billion.
Frederica-based Dong said on Thursday that its owners plan to sell between 15.1% and 17.4% of the company at between 200 Danish Kroner and Dkr225 per share. The per-share price equates to an implied market capitalization of between Dkr83.5 billion and Dkr 106.5 billion ($12.5 billion and $16 billion).
"The valuation range is higher than I am comfortable assigning to Dong," said Sydbank analyst Morten Imsgard. "The price is highly sensitive to what you think of the future of offshore wind and how successful they (Dong) are at holding onto their cost leadership."
The state-owned energy group is the world's largest operator of offshore wind farms with about 26% of global capacity, about twice that of its closest competitor. The company will more than double its installed capacity by 2020, but remains heavily dependent on government subsidies of wind energy and is facing increased competition.
Dong posted Ebitda of Dkr18.5 billion in 2015, up from Dkr16.4 billion in 2014. The company is forecasting earnings of Dkr20 to Dkr23 billion for 2016, equating to an implied equity valuation of about 4.4 times this year's earnings based on the mid-point of both the earnings and valuation forks. Dong had net debt of Dkr9.19 billion at the end of March.
The Danish state, which owns 58.8% of the utility, Goldman Sachs (GS) - Get Report , with 17.9%, and SEAS-NVE, with 10.8% will reduce their holdings in the IPO. The sale will not include any new equity and thus will not raise new funds for Dong.
The Danish state will retain at least a 50.1% of Dong following the IPO, assuming that an overallotment option has been exercised in full. Goldman Sachs, which owns its shares through subsidiary New Energy Investment, will reduce its holding to 13.3%, while SEAS-NVE will be left with just over 9.5%.
The offer period for the shares opened on Thursday and will close by June 8 at the latest. Trading under the stock ticker DENERG is expected to commence on June 9 on Nasdaq Copenhagen.