Arise Windpower AB (AWP), a Swedish developer of renewable energy projects, is targeting investments from pension funds as it seeks to curb reliance on bank loans.
Institutional investors such as pension funds will be invited to take stakes in wind farms to generate funds for new projects, Chief Executive Officer Peter Nygren said yesterday in an interview.
“We probably will sell off part of our operational wind farms,” Nygren said. “The profit and cash released can be used in new wind farms.”
Arise is targeting a fivefold expansion in wind turbines by 2014 as Sweden seeks to generate 49 percent of its power from renewable sources by the end of the decade. Pension funds typically have a lower threshold for return on invested capital and a longer timeframe than other investors, Nygren said.
Arise previously financed projects through bank loans with the company putting up 30 percent of funding itself. The company said earlier this month it had taken over a project in northern Sweden that would probably be financed via this method.
In future, while the levels of gearing will remain the same, financing will be provided by pension funds, bank loans, or a combination of the two, according to the company. Gearing refers to the ratio of long-term debt to equity capital.
Other financing methods are also being examined such as asking turbine suppliers to provide loans to help fund those fields where they wish to provide equipment. Cash may also be raised through bond sales, though there are no plans to sell any more shares.
The company sold shares on the OMX Nordic Exchange in Stockholm in March 2010. Its shares have fallen 49 percent since then. It raised 350 million Swedish kronor ($52 million) in March through a bond issue.
“The share price shows the stock market is not very keen on investing or putting in additional money into the company at these levels,” Henrik Alveskog, an analyst at Redeye AB in Stockholm, said by phone today. “It is more cost efficient for them to go directly to certain investors.”
Arise Windpower currently has 64 wind turbines in operation, Nygren said. The company plans to have 300 wind turbines in operation or under construction by 2014. Arise owns a 50 percent stake in the Jaadras field, northern Europe’s largest onshore wind project, which is due to start in October.
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