Four Danish pension funds want to bid for Goldman Sachs’ DONG Energy stake

PBU, Laerernes, PKA and PenSAM in appeal to government

Four Danish pension funds have made a last-minute appeal to the government to allow them to bid for the 19% stake in energy giant DONG that the government wants to sell to US investment bank Goldman Sachs in an increasingly controversial transaction.
Executives from the four funds wrote to Finance Minister Bjarne Corydon yesterday (January 26) saying: “We think it’s more attractive from a Danish point of view that the benefits of the investment [in DONG] go to Danish pension funds instead of a US investment bank. Another benefit in selling to us is that Danish society can be sure that there is Danish taxation of returns from this equity investment.”
The letter’s signatories are board members at Danish pension funds PBU (for early childhood teachers), Laerernes (for teachers), PKA (for the health care sector) and PenSAM, a pension fund tied to Denmark’s third largest labour union. Responsible Investor understands that they have yet to get a response from Corydon but expect one soon.
As reported, the deal sees Goldman paying DKK8bn (€1.07bn) to take a 19% stake in DONG, the world’s largest offshore wind park builder and operator. Goldman would also get a seat on DONG’s board and broad veto rights. Danish pension funds ATP and PFA are also part of the deal and would become minority investors in DONG, with stakes of 5% and 2%, respectively.
But just last Thursday, Poul Nyrup Rasmussen, a former Prime Minister from the ruling Social Democratic Party, called the deal a “disaster”.
Speaking to the Politiken newspaper, he said: “The deal is taking place at a bad time and at an awful price to a tarnished company [Goldman Sachs] that will have the right to veto all strategic decisions at DONG. I hope that here at the eleventh hour, Parliament will reconsider and avoid this disaster.”Rasmussen added that instead of selling to Goldman, the government should raise the capital from Danish pension funds or use its sterling credit rating to borrow from bond markets. Concerns have also been raised in the Danish press about whether Goldman would be eligible to pay full Danish tax on returns from its investment.
Contacted by RI, Goldman spokeswoman Sophie Ramsay said: “As a matter of principle we do not comment on the political situation in Denmark but hope that this process will be concluded shortly to allow DONG and its employees to execute on the important renewable energy strategy.

“We would like to emphasize that this is a long-term investment and we support the management team’s current strategy across the company’s activities, including the significant renewable energy investments.”
Meanwhile, Rasmussen and other critics of the deal have put the government under more pressure by scheduling a protest outside of the Danish parliament for Wednesday, or the day before the parliament’s finance committee is due to vote on it. Along with the former PM, executives from the schemes wanting to replace Goldman as the buyer of the DONG stake are expected to address the protest.
Despite all this, Corydon refuses to consider alternatives to the Goldman-led bid for DONG, insisting that it was the best deal the government could get and that terms were reasonable. He is to meet with members of the finance committee on Tuesday.
Four of them, two from the Danish People’s Party and two from the left-wing Red-Green Alliance, have already said they will reject the deal. But it can only be derailed if committee MPs from the ruling coalition of Social Democrats, Socialists and Liberals go against Corydon and vote no. As of now, not one of these MPs has spoken out against it.