TrendGrowing deal-making activity in the alternative energy sector

Published 1 June 2007

With the battle over wind turbine maker Repower over, and the battle over Nordex may begin — both offering evidence for rich deal making in alternative energy

Goldman Sachs knows how to make money. The Wall Street giant and Berlin-based private equity group CMP Capital Management Partners are considering selling their minority stake in Norderstedt, Germany-based turbine maker Nordex AG to take advantage of growing demand for wind energy. Nordex said two days ago that the financial investors were considering the sale of their combined 44 percent holding, worth $1.1 billion. Goldman and CMP, with some foresight, acquired their position two years ago when alternative energy had not yet become a popular and promising investment, and when, moreover, Nordex itself was struggling (Nordex is not the fourth largest wind power group in Germany).

The Deal’s Andrew Bulkeley reports that knowledgable sources said Goldman was acting as its own financial adviser and that talks with potential buyers had already begun. Goldman may yet decide to keep its Nordex holding.

If Goldman and CMP sell, who will be the likely buyers? Paris, France-based Areva is one. A few weeks ago the French company withdrew its €1.14 billion offer for Hamburg, Germany-based Repower, thus ending a five-month bidding war and allowing India’s Suzlon Energy to offer €1.2 billion for 75 percent of Repower.

The Areva-Suzlon battle over Repower, Germany’s third-largest maker of wind power equipment, offers a glimpse of a landscape typifyed more and more by deals and investments in renewable energy companies, an activity spurred by rising oil prices and anxiety about climate change. Bilbao, Spain-based Iberdrola (company’s motto: “Compartimos los mismos valores… Objetivos comunes… Respeto al medio ambiente) will become the world’s No. 1 renewable energy group after its $22.4 billion acquisition of Scottish Power plc. We note other deals, among them U.K.-based International Power’s £100 million purchase of Christofferson Robb’s European wind generation unit and BP’s $98 million acquisition of Charlottesville, Virginia-based Greenlight Energy, a wind energy group.

Back to Nordex: In 2005 Nordex faced cash difficulties which caused it to turn away customers, and there were fears that the company would not survive. Goldman and CMP came on board, and last year Nordex saw sales increase 66 percent to €514 million and it had an operating profit of €16.6 million after a €5.3 million loss in 2005. Since the start of the year, rumors about takeover have nearly doubled Nordex’s shares. In addition to the rumors, there was another reason for Nordex’s sturdy stock performance: German securities regulations would allow a buyer of the Goldman-CMP stake in the company to make an offer for the entire group on similar terms.