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Deep pockets are strong points for Eneco bidders Shell and PGGM

Printed below is an English translation of an article published today by the Dutch Financial Times, Financieele Dagblad.

Deep pockets are strong points for Eneco bidders Shell and PGGM

Carel Grol

Shell and PGGM want to expand Eneco ‘into a European player, while maintaining the sustainable strategy’. And geographically focused on Northwest Europe. This was reported by the oil company and the pension provider on Monday when they expressed their interest. And now?

One thing is clear: Shell and PGGM have not bought Eneco. Not yet. The sales process will take months. There will be an auction. Price is not the only criterion here: it is also about issues such as sustainability and employment.


Adriaan Visser, the D66 alderman in Rotterdam who boosts sales, and Eneco CEO Ruud Sondag, have both hinted at great interest. “I do not think there are five parties,” Visser said in February last year about possible bidders. Sunday, a month ago: “We are a great company. Leader in the energy transition. ‘ So he expected a lot of bids.

Eneco wind farm in the far north of the Netherlands: 19 turbines that deliver exclusively to Google. Eneco can easily roll out new wind farms with a wealthy mother. Photo: Hollandse Hoogte

Shell and PGGM gave their first impetus, a stone in the pond in an auction that has yet to start. Shell has a heavy fossil stamp and is therefore controversial. Because Eneco is green. That was one of the reasons why such a war raged in Eneco’s boardroom. How ‘fossil’ can a possible buyer of Eneco be? That was the question, which, incidentally, has not been answered by the outside world.


Everything revolves around image formation. For example, Eneco presents itself as ‘übergroen’, but if full capacity is used, so when all sources are used to the maximum, 45% of the electricity produced by Eneco comes from gas plants, and they are not green. This was evident from a document that was sent to the shareholders around the sale.

Shell gets the bulk of its sales from oil and gas. On the other hand, it is busy with a cautious greening. And a little bit of something very big does bring weight with it. In concrete terms: in megawatts, so in absolute terms, Shell already has more green power worldwide than Eneco. So at both Eneco and Shell, ‘green’ is also a matter of perception.

City councils

And what if Shell and PGGM made the best bid in a few months? Then all municipal councils ultimately have to judge about that. The majority of the lectures of mayors and aldermen have already sanctioned the transaction, so a lot of opposition can not be expected from the councils – even though resistance against Shell can never be completely closed.

When announcing their plans, Shell and PGGM said they would like to expand Eneco into a European player. In the summer of 2017, credit rating agency S & P concluded that Eneco ‘has a limited size compared to European industry peers’. It tended to ‘too big for a napkin and too small for a tablecloth’ situation: if Eneco really wanted to invest in ambitious wind plans, it would need a wealthy partner.


There is apparently no lack of money from Shell and PGGM. Nevertheless, it remains to be seen with them how Eneco can expand under their wings: autonomous growth of customers is difficult in a mature market where fighting is for every energy contract.

In recent years Eneco has made several acquisitions: in Belgium it bought two Eni companies with a large customer portfolio for € 300 mln, in Germany the Hamburg company Lichtblick was bought for about € 400 mln. That kind of ‘add on’ acquisitions can continue to do the business.

Larger acquisitions? Companies like Orsted, the former Dong, and Innogy, are fully dedicated to clean energy. But they have a market value of more than € 20 billion. According to estimates, Eneco will be worth around € 3 billion: that the company as Shell and PGGM joint venture is buying one of these mastodons is unlikely.


However, Eneco can indeed grow under the auspices of the oil company and the pension fund, says Thijs Berkelder, an analyst of ABN Amro, who follows Shell. Shell wants to double its investments in non-fossil activities to $ 4 billion per year.

Berkelder gives a calculation example. ‘Imagine an offshore wind farm costs $ 2 billion. If 75% of the debt is financed by debt, this means that $ 500 million of equity has to be contributed. Shell can then contribute $ 250 million and a partner the other half. This way you can see that Shell invests $ 250 million and a wind farm of $ 2 billion is being built. ‘

It could just be the future for Eneco. A condition is that Shell and PGGM win the auction. And that is by no means a given.


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