Stedin Group to ask shareholders to decide on a capital request of €200 million
Rotterdam, April 1, 2021 – The Executive Board, Supervisory Board and Shareholders’ Committee of Stedin Group have reached agreement on strengthening the grid operator’s equity with a capital contribution of €200 million for 2021. This is required for investment in the energy transition. Stedin Group is now proposing to issue cumulative preference shares that all its 44 shareholders can subscribe to. At the end of June it will become clear how many shareholders will do this.
The investment will provide municipalities with a fixed dividend of 3% per year. The issued capital will be contributed to the company itself, which is growing strongly and rising in value due to the increasing investments as a result of the energy transition. By investing, the shareholders will facilitate the energy transition in Stedin’s service area.
Danny Benima, CFO of Stedin Group, “The energy transition is a major social and financial issue. This proposal combines these two facets into an attractive proposition.”
Arjan van Gils, alderman responsible for finance in the municipality of Rotterdam and chairman of the Shareholders' Committee, “Strengthening its equity will help Stedin Group move ahead and become a robust, creditworthy partner in the energy transition. Intensive co-operation between Stedin Group and the shareholders has resulted in a balanced package in which both parties have a preference for a capital injection by the existing shareholders. I am pleased that we have reached this position and that shareholders will have the opportunity to subscribe for the preference shares.’’
Investing in the energy transition
Investment in the energy network will ensure that locally generated solar and wind energy can be transported, districts can be heated with a sustainable alternative to natural gas and a charging infrastructure can be installed for millions of electric cars and buses. This is required to meet climate targets and bring about the ambitions in the Regional Energy Strategies. As well as ensuring a future-proof energy infrastructure, the capital contribution will create local employment and regional economic growth. The investment will be on top of the regular ongoing investment needed to keep the electricity and gas grids operating. Total investment by Stedin in relation to the energy transition is estimated to run to €7 billion or more by 2030.
Capital request
Stedin Group will require capital of between €750 million and €1 billion up to 2030 to properly streamline the energy transition over the next few years. For the short term, Stedin Group is proposing a capital request of €200 million to its shareholders. Municipal shareholders will be able to subscribe individually for the cumulative preference shares. Stedin Group and the Shareholder’s Committee have recently been working on the related terms and conditions, including a review of the agreements on control and information provision. In June, shareholders will be able to subscribe and a decision will be made during the shareholders’ meeting.
Strengthening the financial position
The long-term capital request to shareholders depends on the pace of the energy transition, future regulations and the associated rates. This issue will be re-examined once the new regulatory framework is known in September 2021. There will also be a critical review of the company’s costs and the planning of investments with an eye to strengthening the financial position. Stedin Group has a €180 million cost saving programme running to 2025. Stedin Group and other grid managers are in discussion with the Netherlands Authority for Consumers and Markets (ACM) on ways of amending the regulatory model. The entry of new shareholders is also being explored.
