The Sale Everyone is Talking About.
After Nordex announced its agreement to sell most of its project development pipeline to RWE for 402.5 million euros, shares in Nordex (NDXG.DE) jumped nearly a quarter. There has been a lot of speculation about what this sale means for both parties with a trader reporting that it might be “a win-win-deal: RWE profits adding strong capacity to its European core business while Nordex gets a huge, urgently needed cash inflow,” AVA Energy, a global energy recruitment agency looked at the sale and unboxed what this could mean for the industry, RWE and Nordex and recruitment.
The Facts of the sale
German manufacturer Nordex announced it is set to sell a 2.7GW pipeline of European development projects to German utility RWE. The portfolio is concentrated in France. It includes 1.8GW of wind projects in France at various stages of development, as well as 100MW of solar in France. The other 800MW is split between developments in Poland, Spain, and Sweden. RWE is set to pay around €402.5m for the assets.
The development platform comes with a team of more than 70 mostly France-based employees and adds to RWE’s existing 22GW pipeline.
The deal which is due to close by the end of 2020 as it still requires the approval of French competition authorities could help return Nordex to profitability.
RWE said 15% of the pipeline was in advanced development stages or close to final investment decisions, with 230MW in receipt of Contracts for Difference or similar tariffs.
RWE chief financial officer Markus Krebber said the deal represented a “unique growth opportunity” due to Nordex’s “large and attractive existing project pipeline and strong development platform”. He added:” The planned acquisition of this leading European renewables developer will strengthen our position in France, one of our target markets.”
RWE Renewables chief executive Anja-Isabel Dotzenrath said France was “one of the most attractive markets in Europe and characterised by ambitious renewable energy targets”.
For Nordex the motivations are:
Nordex said it is taking advantage of a “huge appetite” for project portfolios in Europe.
Strong boost to Nordex’s capital structure
The cash consideration of EUR 402.5 million before deduction of any customary fees, taxes, and any other adjustments
Further reinforcing the growth prospects, underpinned by a strong order book
Were the motivations Pandemic related?
Pulling out of European project development is not linked to stress arising from the coronavirus, Nordex spokeswoman Antje Eckert said by phone from Hamburg. “Selling turbines in Europe is our main business,” said Eckert.
Ramifications of the sale
Market share – RWE
This sale increases the market share for RWE as RWE profits adding strong capacity to its
European core business. This will also lead to an increase in shares values for RWE. After hitting a
low at the end of March, RWE shares have now more than recouped all this year’s earlier losses
and are trading about 22% higher than at the beginning of the year. Overall, this sale could
accelerate growth for RWE in the long term.
RWE hiring plans will be altered.
This sale might alter RWE hiring plans starting early next years. The questions on everyone’s lips
surround hiring; Will RWE need to hire on mass? How will the team of 70 take to their new
management? What does it mean for company culture? The development platform comes with a
team of more than 70 mostly France-based employees and adds to RWE’s existing 22GW
Where does that leave Nordex?
Nordex SE is set to focus on developing onshore wind projects outside Europe after it agreed to
sell its renewable energy project portfolio to RWE AG.
As a part of its value chain offering in some markets, the Nordex Group develops its own portfolio
of wind farm projects, which are then sold onto customers or investors. The company said it
would continue with its wind developments in its other markets. Nordex will continue to sell wind
turbines in Europe alongside the new focus.
About AVA Energy
AVA Energy is a global energy recruitment consultancy and manpower provider. Headquartered in London, UK, AVA Energy operates across all Energy markets. We provide high-quality staffing solutions across Power Generation, Oil & Gas, Renewables, Energy Management, Nuclear & Marine. We are fully operational and compliant in 98% of the world's countries and have a truly global network of candidates.