January 21, 2020 / 1:30 PM / a month ago

Offshore wind giant Orsted favors small deals over big M&A: CEO

BERLIN (Reuters) - Denmark’s Orsted (ORSTED.CO), the world’s largest operator of offshore wind parks, plans to steer clear of super-sized takeovers, its chief executive said on Tuesday, preferring small deals to keep the group among the biggest renewable players.

“I’m fundamentally convinced that you de-risk your M&A strategy by not overstretching it,” Henrik Poulsen told Reuters during the annual energy summit hosted by Handelsblatt newspaper in Berlin.

“I’d rather make a series of small acquisitions than one big bang where we could stumble,” Poulsen said, adding any deals would rather be in the hundreds of millions, similar to recent acquisitions in the United States.

He said any deals would focus on projects in new markets.

Poulsen, Orsted’s CEO since 2012, oversaw the group’s transformation from a diversified utility with oil and gas activities into the world’s No.1 developer of offshore wind farms.

He said he expected the global green energy sector to be dominated by traditional utilities as well as big oil groups, which have been increasingly moving into the power sector as a way to diversify away from fossil fuels.

Poulsen said that scale was vital and that not all of the groups active in the industry would gain scale quickly enough to remain in the race, which would be a trigger for consolidation.

“We’ll be a lot smarter in probably less than 5 years but when you see the landscape today you can begin to see the future global green energy majors emerge,” he added.

Globally, Orsted ranks 10th in terms of installed renewable capacity, behind peers including Spain’s Iberdrola (IBE.MC), U.S.-based NextEra (NEE.N), Italy’s Enel (ENEI.MI), Portugal’s EDP (EDP.LS) and Germany’s RWE (RWEG.DE).

Goldman Sachs estimates that the world’s top 10 renewables groups capture only about 15% of the world’s total portfolio, leaving sufficient space for newcomers, including oil majors Shell (RDSa.L), BP (BP.L) and Total (TOTF.PA), to muscle in.

Poulsen said it was his goal to keep Orsted, whose shares have nearly tripled since a 2016 listing, among the world’s leaders in the segment. Currently, the group has a market valuation of 297 billion Danish crowns ($44.1 billion).

Orsted is majority-owned by the Danish government, which holds 50.1% following a 2016 listing, and while Poulsen could not say whether that share could change in the future it was his view that Denmark was “quite happy” with its position.

Additional reporting by Stine Jacobsen in Copenhagen; Editing by Thomas Seythal, Michelle Martin and Alexandra Hudson

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