BlackRock Increases Shares in Vestas, EQT Acquires OX2

Renew Holdings purchases Full Circle for £50M, following the UK decision lift restrictions on offshore wind. BlackRock’s holding of voting rights and share in Vestas has increased to 7.59%. And EQT has acquired renewable developer OX2 for $1.58 Billion.

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Allen Hall: I’m Allen Hall, president of Weather Guard Lightning Tech, and I’m here with the founder and CEO of IntelStor Phil Totaro and the Chief Commercial Officer of Weather Guard Lightning Tech, Joel Saxum. And this is your News Flash. Newsflash is brought to you by our friends at IntelStor. If you want mar, ket intelligence that generates revenue, then book a demonstration of IntelStor at intelstor.com.

Renew Holdings and engineering service company base in Leeds has purchased full circle. Group Holding BV, a Dutch firm specializing in onshore wind turbine repair and maintenance. The acquisition, valued at 50 million pounds, was funded through Renew’s existing resources and banking facilities. This move follows the new labor government’s decision to lift restrictions on new onshore wind projects in England.

Well, UK government changed and they have become more proactive on onshore wind. That made a nice little market for all the repair companies in the UK to be gobbled up by larger players.

Philip Totaro: Yeah, precisely, and at the end of the day Full Circle is one that already has a lot of contracts in place on the aging fleet, so there are going to be repowering opportunities in addition to new build in, both Lower England, Scotland, Wales, et cetera.

So you’re, you’re going to see a company like Full Circle continue to thrive, but all the other O& M shops and, and independent service providers over there are going to start probably getting a lot more attention and potentially work if you start seeing more build out in the market.

The funny thing about the UK is even a lot of the, well in Ireland you’d have to say too, a lot of the new build, doesn’t always get the OEM full service agreement. So they’ve tended to rely a little bit more on the independent service providers in that market, again, particularly for the older assets.

So, this is a, it’s, I guess it’s a good time to be in the The service and repair business.

Joel Saxum: I think you’re going to continue to see a lot more of this happen. We’ve been talking about for the last few years is this market consolidation of these smaller ISPs. And I say smaller, but 50 million or 50 million pound acquisition is not a small acquisition.

So full circle repairs, but having those contracts in place makes them attractive for an acquisition. So I know that you’ve seen some, there’s been some larger ones scooping up and buying up and buying contracts and a little bit of mark margin compression and things over there in that market. I would still continue to look for, like, Renew Holdings.

I don’t know anything about the internal workings of that company, but I would bet this is not their last acquisition. And you’ve seen other large groups doing the same thing. Mulahan and some others. So, keep watching that space. Especially, like Phil, like you said, as the Labour Party has lifted that moratorium on work in the, in the UK.

Allen Hall: Vestas has disclosed a notification from BlackRock regarding a change in its group structure. Following the acquisition of Global Infrastructure Management, BlackRock’s holding of voting rights and share capital in Vestas has increased to 7. 59 percent from a previous 5. 36%. The change is effective as of October 1st, with BlackRock now controlling over 1.

5 billion voting rights attached to shares in Vestas. Phil, thank you. Obviously Vestas is a really strong leader on the OEM side in wind. And Blackrock is pushing heavily into renewables. This acquisition, in a sense, does make sense from BlackRock’s standpoint, but does it create issues for Vestas?

Philip Totaro: Well, it’s interesting because the global infrastructure management acquisition was really more about the asset ownership and development pipeline and portfolio. BlackRock also, as you mentioned, already had a 5 percent market share. Holding in Vestas as a supply chain company, while these infrastructure investment companies have largely focused on the asset ownership and the project development pipeline, they’re starting to look a little more critically at the supply chain, particularly the OEMs, but also you’ve seen, Infrastructure investors making acquisitions on vessel owners and operators.

We just talked last week about Macquarie Group and, and Zyton. But where, where this comes into play for, the turbine OEMs is a company that really doesn’t tolerate, financial losses. Getting involved in a supply chain company that has struggled, at times with, profitability and the fact that they’re going to be increasing their, their shareholding here, it’s, it’s not enough to necessarily get them, a seat on the board or anything like that.

And it’s not necessarily enough for them to have anything more than just kind of minor influence. However, it’s indicative of the fact that you’re probably going to see more investment funds start getting a little more vertically integrated in terms of the scope and scale of their investments.

Joel Saxum: Yeah, I think this is, this is BlackRock who, BlackRock knows how to make money. They’re a trillion dollar hold, plus holdings company, right? So they’re, they’re, what they’re doing here is hedging their bets that they’ve already made. Like the bet they made in Global Infrastructure Partners as an operator developer, now they’re making sure that they’re getting a little bit deeper involved in what that supply chain is going to be, what that OEM looks like.

And like I said, or like Phil said, BlackRock does not tolerate losses. So. As the shares start to grow, you could see some changes at some of these OEMs.

Allen Hall: Swedish private equity firm EQTAB has finalized its tender offer for OX2AB. a Stockholm based renewable developer. The deal values OX2 at approximately 1.58 billion U. S. dollars. EQT’s investment vehicle, Otello Bitco AB, has secured a 98. 81 percent stake in OX2. The acquisition is expected to be settled around October 16th, with OX2 applying for delisting from the NASDAQ Stockholm by the end of October. Phil, this is a unique deal up in Sweden. There seems to be more activity happening in Sweden lately economy is right there.

What is the next step for EQT as they move forward with this acquisition?

Philip Totaro: EQT infrastructure has been getting involved in a lot of renewables projects. We keep talking on Newsflash about these infrastructure funds, plowing money into renewables and in different places around the world.

This Swedish infrastructure fund. Is backing, basically one of Sweden’s biggest private non utility developers and OX2 has a huge pipeline of operational projects as well as developmental assets that obviously EQT wants wants a piece of and, the, the thing that we, Kind of gloss over and I hope it’s not lost on on all of our viewers and listeners is in the current market environment where project developers may struggle for access to capital a company like equity has already done a lot of fundraising and has capital at their disposal to spend on.

Helping projects get get developed and getting the pipeline moving. So this is a play on the part of an infrastructure investor where, they do see, even though a lot of oil and gas companies or other Companies have have pulled out of renewables investments. A company like EQT wants to be able to plow money in because they see returns.

And particularly with OX two, X two’s expanded beyond Scandinavia to the point where they now have a reasonable portfolio throughout parts of Europe, including Poland. So, OX two’s a, a player and they want to, wants to be a part of that.

Joel Saxum: Yeah, what, what OX2’s plans look like for the future, backed by EQT now, is to evolve from more of a developer, which you see in Sweden a lot. You see a lot of financial asset owners up there, where it’s a company that comes in, they have the money, they just, buy a project, they sit back and they run it on an FSA or something of the sort.

You’re going to see OX2, which they have done that in the past. You’re going to see OX2 evolve into more of an integrated renewable developer and asset owner. So look for them to be more involved in their projects in the future with, bringing engineering support and those kinds of things as well.

Which is a, will be a market change from that Swedish market. And, and just to follow

Philip Totaro: up real quick on that, the OX two’s been a developer in the past that’s basically followed like the build and transfer type of business model where they’ve sold off a lot of the, the early stage and late stage assets that they’ve developed to someone else who’s gonna own it.

And then they may be involved as company that’s gonna help operate. But this gives them, as Joel just mentioned, more of an opportunity to be further integrated. So I think this is a really savvy play on their part.