equity story development and key - dirf · 2019. 7. 11. · key investment highlights ipo equity...
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DIRF meeting
Henrik Brünniche Lund, Head of IR
15 June 2017
EQUITY STORY DEVELOPMENT AND KEY
LEARNINGS FROM DONG ENERGY’S IPO
Key investment highlights
IPO equity story: A clean energy growth story
2
Global leader in attractive offshore wind market1
Differentiated competitive position from value chain integration and proven partnership model in offshore wind2
Robust and highly visible offshore wind build-out plan delivering strong and profitable growth3
Leading Danish utility with a highly regulated profile and a platform to continue developing innovative renewable technologies4
Positive cash flow from low-cost, low-risk O&G producing assets invested in renewable energy5
Highly visible earnings and cash flow growth to support attractive shareholder returns6
Experienced management team with proven track-record and a capable and passionate organisation7
Key lessons learned: Developing and communicating
the equity story
Own your equity story
• Shape equity story - make sure it is ready
before you push the button
• Make the difficult calls on strategy and
structural change if required; IPO is a great
change catalyst
• You must own the equity story and it must
have a couple of distinct hooks
3
Key lessons learned: Developing and communicating
the equity story
Know your company in detail
• Mastering the details of your business will be a
critical credibility builder in front of analysts
and investors
• You may think you know your business
already but an IPO will force you to the next
level
• Run a separate work stream to collect deep
dive analyses of all relevant topics
4
Key lessons learned: Developing and communicating
the equity story
Devote significant time and resources to
marketing process
• Analysts presentation (AP) is critically
important and will require a significant
investment of time
• Post-AP interaction and education of analysts
must also be given serious attention
• Manage review of analyst modelling and
report drafts
• Leverage early look / pilot fishing meetings to
get input and experience
• Start building a base of 5-8 high potential,
quality investors who will have the time to get
comfortable buying deep into the IPO
5
Successful bookbuilding ensured positive development
6
7.27.0
5.9
5.4
4.6
3.8
3.43.13.1
1.7
6.0
3.7
1.9
1.41.1
0.7
2.8
2.4
1.41.1
0.80.80.70.60.6
0.2
31-May27-May 30-May 1-Jun
0.90.80.7
26-May
0.3
6-Jun 7-Jun3-Jun2-Jun 8-Jun
IPO price: 235
Top range price: 255
Low price range: 200
May 26: Initial price range
DKK 200 – DKK 255
June 6: Price range adjusted
DKK 220 – DKK 255
Book coverage multiples
7
Utility
EBITDA DKK 3bn, 12% ROCE in 2016*
Largest Danish utility across
generation, distribution and sales
Conversion of CHPs from fossil fuels
to sustainable biomass. Innovative
bioenergy technology for waste
treatment
Power grid with RAB of DKK 10.6bn
yielding 6% annual return
Upstream Oil & Gas division divested
* Both EBITDA and ROCE exclude a positive one-off of DKK 4.3bn
Global leader in attractive offshore
wind market
Attractive growth options post 2020.
Ambition to more than triple our
capacity by 2025
Secured projects will more than
double installed capacity by 2020
Cost-of-electricity being
systematically reduced
Wind Power
EBITDA DKK 12bn, 17% ROCE in 2016
DONG Energy’s equity story today
Offshore wind is rapidly becoming cost competitive
Key offshore wind cost reduction drivers
Larger turbines
Larger sites
Faster installation cycles
Reduced O&M costs
Increased supplier competition
Reduced return requirements
Rapid technological development
Offshore wind cost (EUR/MWh)1
8
156
145
124 122
102
78
68 68
WalneyExtensionUK 2014
RaceBank
UK 2015
EastAnglia
UK 2015
BorkumRiffgrund IIDE 2015
Horns Rev III
DK 2015
BorseleI & II
NL 2016
KriegersFlak
DK 2016
BorseleIII & IV
NL 2016
Sources: DECC; Danish Energy Agency; Energinet.dk; NEV
1. Levelised revenue (price) of electricity over the lifetime of the project used as proxy for the levelised costs to society. It consists of a subsidy element for the first years and a market
income for the remaining years of the 25 years lifetime. Discount rate of 3.5% used to reflect society’s discount rate. Market income based on country specific public wholesale market
price projections at the time of contracting. For comparability across projects a generic scope adjustment (incl. transmission and extra project development costs) has been applied.
2002 2005 2007 2011 2014 2016 2020
80m90m
107m120m
154m164m
180m
Boeing 747, 76m
What changes after the IPO?
9
Share price performance for DE and peers since IPO
200
220
240
260
280
300
DKK per share
DONG Energy Utility peers
Significant time and resource allocation to
investors and analysts
Managing insider information will become a task
in itself (MAR)
Public profile and media attention will go up -
more complex communications
Scrutiny of financial and non-financial
information increases significantly
Stakeholders become focused on "how will the
market react?“
You start monitoring and managing the quarters
more carefully - don't overdo it
You will be bound by the equity story for a while
- market expects discipline
10
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