OSLO: Norway’s $ 1.3 trillion sovereign wealth fund has made its first direct investment in a renewable energy project, a new asset class for the world’s largest public investor, he said on Wednesday.
The fund bought a 50% stake in the Borssele 1 and 2 offshore wind farm off the Netherlands for 1.375 billion euros ($ 1.63 billion) from Danish Orsted, who will continue to co-own and manage installation.
These direct investments are new for the fund which, until last year, was only authorized by parliament to invest in stocks, bonds and real estate.
The Borssele is the second largest operating offshore wind farm in the world, with an installed capacity of 752 megawatts, which can produce the equivalent of annual electricity consumption for around 1 million Dutch households.
The deal was signed on Wednesday and is expected to be completed in the second or third quarter of 2021.
The transaction will increase Orsted’s 2021 profit before interest, taxes, depreciation and amortization (EBITDA) by approximately DKK 5 billion ($ 799.5 million), Orsted said.
Danske Bank said in a research note that the deal will increase Orsted’s financial resilience. “We also think the implicit valuation of Borssele 1 & 2 looks attractive compared to market expectations,” he said.
Overall, the Norwegian wealth fund plans to invest some 100 billion Norwegian kroner ($ 12 billion) between 2020 and 2022 in unlisted renewable projects such as wind farms and solar parks, not to mention interesting only to North America and Europe, as prescribed by Parliament.
“We want to focus on the big deals so that we don’t spend so much time on the small ones,” Boerge Sivertsen, head of the fund’s renewable infrastructure, told Reuters. “We don’t want to have too many assets.”