Wind power giant Ørsted "cuts off an arm to survive": sells half of the "world's largest offshore wind farm" to private equity giant Apollo for $6.5 billion.

Wind power giant Ørsted "cuts off an arm to survive": sells half of the "world's largest offshore wind farm" to private equity giant Apollo for $6.5 billion.

To address rising costs and mounting political pressure, the world’s largest offshore wind developer, Ørsted, officially announced on Monday that it has agreed to sell a 50% stake in its flagship project—the Hornsea 3 offshore wind farm in the UK—for $6.5 billion to private equity giant Apollo Global Management.

According to the agreement, Apollo will acquire a 50% stake in the Hornsea 3 project located off the UK coast. This move aims to raise urgently needed funds for Ørsted’s other projects and is a core part of Ørsted’s key asset divestment plan.

Ørsted CFO Trond Westlie stated that this sale is “an important milestone” for the company and added that Apollo will bring “infrastructure expertise and scaled capital.” For investors, the deal clearly demonstrates Ørsted’s strategic retrenchment to stabilize its financial situation, even though it means giving up partial ownership of one of its top assets.

In fact, the deal comes after several years of difficulties for Ørsted. The company has recently faced tremendous pressure due to rising interest rates and political uncertainty, especially in the US market, where Trump’s hostility toward offshore wind has directly impacted its business, forcing the company to seek new financing channels.

Apollo Doubles Down on European Infrastructure

For Apollo, this deal is the latest in a series of high-profile investments in Europe’s energy infrastructure sector. The private equity firm is quickly becoming a key capital provider in Europe’s energy transition.

Apollo partner and head of European Credit Leslie Mapondera stated that Apollo aims to be “a provider of long-term, flexible capital solutions.” So far this year, Apollo has closed a record $17 billion in deals in European energy infrastructure. In addition to co-investing in the German grid with RWE, Apollo also led the £4.5 billion financing for EDF’s Hinkley Point C nuclear power plant in the UK.

Strategic Retrenchment under Political and Cost Pressure

This asset sale highlights the severe challenges facing Ørsted. As a global industry leader, 50% owned by the Danish government, the company has struggled in recent years due to shifts in the industry’s macro environment.

The most significant pressure comes from the US. In August 2023, faced with surging interest rates and rising project costs, Ørsted abandoned two major projects in the US. More recently, President Trump’s hostile stance towards offshore wind has further worsened the company’s situation. As Trump attempted to block a rival developer’s project, market concerns about policy risks for the entire US offshore wind industry intensified, triggering investor panic that spilled over to Ørsted, which last month was forced to raise $9 billion via a share placement.

Additionally, the Trump administration once issued a stop-work order for Ørsted’s Revolution Wind project off the US Northeast coast, although the company later persuaded a judge to lift the order. Against this backdrop, selling a stake in the flagship Hornsea 3 asset has become a necessary move to raise funds and keep other projects running.

Although Ørsted has sold half its stake, the Hornsea 3 project itself remains crucial for the UK’s energy strategy. The project is a vital part of the UK government’s plan to decarbonize the power system by 2030.

Hornsea 3 is planned to have an installed capacity of 2.9 GW. Once completed, it will become the world’s largest offshore wind farm. Its annual power generation is expected to be enough to meet the electricity needs of about three million homes. Apollo’s investment also provides financial assurance to ensure smooth advancement of this key infrastructure project.

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