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Might Mainstream Renewable Power be sold?

Majority shareholder Aker Horizons has several options to consider for future ownership structure of Dublin-based renewables firm

Mainstream Renewable Power is majority-owned by Norway's Aker Horizons.

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Cantillon
Thu Apr 4 2024 - 05:47

Aker Horizons, the Norwegian green energy company that has reasons to regret buying control of Dublin-based Mainstream Renewable Power three years ago, has seen its shares rally by almost 10 per cent in the past week on foot of a move to tidy up another part of its portfolio.

The company’s 43 per cent-owned Aker Carbon Capture, which has the technology to capture and store carbon dioxide from industrial operations, has agreed to sell 80 per cent of itself to oilfield services giant SLB, formerly known as Schlumberger.

Analyst Roald Hartvigsen with Clarksons Securities in Oslo has characterised the deal as a “defensive” one. It reduces Aker Horizon’s debt burden as it faces bond refinancings over the next two years And removes the risk of it having to commit further cash to Aker Carbon Capture if it were needed.

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Once the sale is done, it will leave Aker Horizons with two main holdings: its 58 per cent-owned Mainstream, and a business developing hydrogen projects. (Aker Horizons, in turn, is controlled by Aker Asa, a Norwegian fishing-to-engineering holding company that is behind six listed entities, including itself.)

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Mainstream has booked the equivalent of about €870 million of impairment charges against Chilean assets since the start of 2022 due to various problems in that market. However, it managed to restructure more than €1.1 billion of debt last year — stabilising the business.

Might Aker Horizons’s next move be to offload Mainstream? Hartvigsen is doubtful. “While Mainstream could also be a candidate for a divestment, we believe its convoluted portfolio structure and weak profitability make it significantly harder to come to an agreement with potential buyers on price,” he said.

However, he sees potential to address a pitch made to legacy Mainstream shareholders (the estate of the company’s late founder Eddie O’Connor and Irish high-net-worth individuals continue to own 16.5 per cent) that the company would go through its own initial public offering in time. The original plan was by the third anniversary of the takeover, which is next month.

Clarkson’s analyst reckons there’s now scope for Aker Horizons to offer minority Mainstream investors an opportunity to convert their Mainstream shares into Aker stock. “We believe such a move is much more feasible with Aker Carbon Capture out of the picture,” he concludes.

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