Goldman and Danish pension funds’ DONG Energy deal facing scrutiny

Danish finance minister Bjarne Corydon has come under pressure from Danish MPs over the government’s proposed sale of a 26% stake in energy giant DONG – the world’s largest offshore wind park builder and operator – to US investment bank Goldman Sachs and Danish pension funds ATP and PFA.

Under the terms of the sale, announced in October, Goldman would buy DKK8bn (€1.07bn) worth of DONG shares, giving it 19% of the company and a seat on its board. ATP would pay DKK2.2bn for 5% and board representation. PFA’s investment would total DKK800m, giving it 2% but no board seat.

But the deal needs the approval of the finance committee to the Danish Parliament. Responsible Investor has learned that MPs from the Danish People’s Party (DPP) and the leftist Red-Green Alliance have serious doubts about it and that they’ve asked Corydon to explain it.

According to DPP sources, Corydon will have to answer why Goldman was given veto rights despite being a minority investor and whether press reports about PensionDanmark having made a higher bid are accurate.

Goldman’s veto power was disclosed in a finance ministry document sent to the committee in early December.The document states that DONG management needs Goldman’s approval for major decisions like capital hikes, senior management changes and acquisitions. ATP has no such power.

Contacted by RI, Peter Brixen, a senior finance ministry official, defended the provision. “It was put in so that Goldman can be sure that DONG, which is still majority owned by the government, does not deviate from the business plan that was agreed. That a private investor wants that kind of certainty is understandable,” he said.

But he declined to comment on Danish press reports saying that PensionDanmark had actually outbid Goldman, ATP and PFA. “As the other bids have not been made public, I can’t comment.” But Brixen insisted that in the interest of DONG and the public, the finance ministry had accepted the best bid.

Corydon’s evidence before the finance committee may not affect the government’s deal with Goldman. That’s because the ruling coalition of Social Democrats, Socialists and Liberals have a majority on the committee, and none of them have criticised the deal publicly.

Indeed, committee chairwoman Sofie Carsten Nielsen recently went on Danish public television to say that Goldman’s bid, while not perfect, was the best as it offered the most capital.